When it comes to a mortgage budget, how do you know what's right for you? In this video I talk about all the things you should take into consideration when it comes to your mortgage budget and mortgage payments, including the best ways to prepare, what lenders look at when it comes to your mortgage budget, common expenses people forget, and a useful rule of thumb, among other things!
If you're budgeting for a mortgage you won't want to miss this one! Don't forget to like and subscribe, I put out new videos on mortgage education every Tuesday and Saturday
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Hurricanes, tornadoes, flooding, oh my gosh, what a crazy, crazy week. Let me try to bring you a video that is not crazy.
Today, I'm gonna talk about mortgage and budget. By the end of this video, my goal for you is for you to have a great idea of what a good mortgage budget looks like for you.
Welcome to your one stop shop for anything and everything mortgage education. I drop new videos every Tuesday and Saturday, I would love if you would subscribe to the channel.
My name is Stephanie Weeks, 17 year loan officer, recognized in the top 1% in the nation out of over 300,000 loan officers for several years running. My goal and my mission is to help bring mortgage peace to the world, so thank you so much for tuning in, I am here to share all my knowledge with you.
Not only do you want a mortgage, but you want the right mortgage. You want a mortgage that fits in your budget. You want to know what that budget looks like. What I always say is when your lender tells you, okay, here's your estimated mortgage payment, nausea should not overtake your body, okay, don't be nauseous. If you're not like, okay, that's my payment, I want you to stop and I want you to think. You need to stay tuned into this entire video to make sure that you not only get the mortgage that you want, but the mortgage that is right for you, that puts you in the best financial position.
How to best prepare for your mortgage payment. I want you to look at your budget and let's say, if you're already renting, how do you feel every month when you write that check? Do you feel like you can add a little bit more? Are you feeling like, gosh, this is a lot of pressure, maybe I should, you know, kind of take it down a notch? Then that is your first guide and your first step, an indicator of what might be right for you. If you don't have a mortgage and you have not rented yet, then what you wanna do is try to look at your budget and figure out, okay, how much mortgage can I afford? And a good rule of thumb is take your monthly income and take 30% of that and see how that number feels. And to go a step even farther than that to prepare for home ownership, I want you to take that amount and put it in a savings account every month, for as many months as you can, to make sure that you can still meet all your other obligations and that that is a payment that is comfortable to you.
So what do lenders generally look at when it comes to your budget? So the black and white, good old days, was always 28 and 36. 28% of your income should go to your house, and when you add your house and all of your other debts, it should not be more than 36%. That is like perfection, right? Well that hasn't been around for quite a long time now, just because everything changes. So I would say, ideally, the lower the better, do not get me wrong, but shoot for 30%, shoot for 28%, but don't go above 35%. I don't think that's really safe to have a payment that's more than 35% of your monthly income. So that's what the lender's gonna look at is, or one of the things they're gonna look at is how much is your income in relation to that new proposed house payment?
The next thing I want you to take into consideration, especially if you're a first-time home buyer, do not forget you have utilities, and you have cable and you have phone bills, and you may have to pay somebody to help you cut the grass, and then the AC might break, and then the dishwasher might break and all this stuff. So make sure that you're not looking at overdoing what you can actually afford, and that you're accounting for some of those extra expenses, like the things that I just mentioned.
I do want you to sit down and write out a budget. Don't forget, what if you pay daycare? What if you pay aftercare? What if you have to buy diapers or groceries? Those are things that the lender's not really looking at, where you have to be responsible for yourself and accountable, and know that you are allocating money and planning for those other expenses that the lender's not taking into consideration with your pre-approval.
I'm gonna give you some examples, using my handy-dandy calculator. Let's say that your income, before taxes, is $4,000 a month, and you want to have a 30% housing payment, that would be $1,200 a month, or less, is a good reference point of where you might want your payment to be when you buy a house. Let's say, if your income is 5,000 a month, and we're doing the 30% rule, that's 1,500. Don't forget your mortgage includes principal interest, property taxes, home insurance, mortgage insurance. If you're buying a condo, don't forget, big condo fees are gonna be on top of all the other numbers, and you want them to be in your 30% if you want to be super, super safe.
And lastly, but not leastly, I wanna mention again, my no vomit rule. So what that means is if I just mentioned to you that you should have a $1,200 payment and you went, ah, or you felt really nauseous, don't do it then. Just because I said you're in that right box, remember, I don't know about groceries and daycare, and a million other things that you might need to spend money on to survive.
So these are just rules of thumb, these are just reference points, you are responsible for you. I'm gonna drop the link below to my monthly payment cheat sheet. Monthly payment cheat sheet, a little sheet I put together. it's free for you to have, just click on it and you can have it. And hopefully this helps you make the best decision for your mortgage financing.
Type WIN in the comment section below, if you feel like you're gonna win now, if you feel better about having a better idea of what to think about, what to consider, how to prepare for that mortgage. Please, all caps, WIN, let me know what you're thinking.
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Thank you so much guys, and gals.
Every year an average of 21 million people apply for mortgages in the US, and only around 7 million close. I'm on a mission is to change that by spreading mortgage education. Sign up for my newsletter to be a part of my Mortgage Peace Movement!