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How Big of a Mortgage Can I Afford?

Let’s say you’re renting right now.  As you have always heard, you could be building equity in your own house instead of seeing that monthly payment account for zero toward achieving the American dream of owning your own home.  

Fast forward to 2015 and a reality check.  I know it’s tough for aspiring home owners, but if you are paying rent every month and meeting your other financial obligations on time, I believe I can help you get qualified for a mortgage where you will wind up making the same monthly payment (or less) as your current rent payment.  

In my life time, mortgage interest rates have never been as low as they are now.  If you want to own rather than rent, I urge you to exhaust all efforts to obtain mortgage financing. I can help you.  I can refer you to local banks and local area mortgage brokers and also, believe it or not, highly recommended Internet based mortgage resources.  

We are coming out of this Great Recession.  If you are ready to own, I stand ready to assist you!   

Not only does owning a home give you a haven for yourself and your family, it also makes great financial sense because of the tax benefits — which you can’t take advantage of when paying rent.

Over the years I have used this example which still works today.  The following calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too. Based only on your current rent, use this calculation to figure out how much mortgage you can afford.

Rent: _________________________

Multiplier: x 1.32

Mortgage payment: _________________________

Because of Federal and State tax deductions, you can still make a mortgage payment — including taxes and insurance — that is approximately one-third larger than your current rent payment and end up with the same amount of income.

For more help, Google Fannie Mae’s online mortgage calculators.