Home Mortgage: How Much Home Can You Afford?
Consider all of the costs that go into buying a home so that you can make a good decision on your home purchase price.
Homeownership planning starts before you submit your personal information for a mortgage loan. Taking a close look at the total cost of homeownership before you begin your search will help you determine how much you can truly afford. A key factor for loan approval is your loan-to-value ratio, or LTV. Basically LTV tells a lender how much money you can put down versus how much you need to borrow. You won't always need a 20% down payment to get a mortgage.
However, when your down payment is less than 20%, there are additional expenses to consider. For example, let's say the home you'd like to buy has a sale price of $150,000, and you've saved $30,000 for a down payment. This means you're asking a lender to loan you $120,000 toward the purchase of the home. To determine your LTV, divide the loan value of $120,000 by the sales price of the home, which is $150,000. In this example, your LTV is 80%.
Before making a decision on whether to approve your loan, the lender performs a careful review of your income, assets, credit history, and LTV. The higher your loan-to-value ratio, the more risky it is for a lender to loan you money. Saving for a larger payment may provide your family longer-term financial stability.
As you look for your dream home, the sale price isn't your only cost. The true cost of homeownership also includes taxes, insurance, utility bills, and homeowners dues, as well as any needed repairs or renovations and ongoing maintenance. Be sure to factor in all costs to see how much money you really need and adjust your budget and expectations accordingly. Visit BBT.com/mortgage for free mortgage-related calculators to help you crunch the numbers.
When you're ready to pre-qualify for a mortgage loan to help you shop for your dream home, return to BBT.com/mortgage to select an experienced BB&T mortgage loan professional. They'll assist you with prequalifying. And after you've found the home you want, they'll help you begin your mortgage process. Your mortgage loan professional works closely with you throughout the mortgage process all the way to closing. At BB&T, we provide a positive mortgage loan experience with easy-to-follow instructions and clear communication to make your dream home a reality. Visit BBT.com/mortgage to get started.
Loans, lines of credit and credit cards are subject to credit approval.
All BB&T mortgage professionals are registered on the Nationwide Mortgage Licensing System & Registry (NMLS), which promotes uniformity and transparency throughout the residential real estate industry. Search the NMLS Registry.
Branch Banking and Trust Company is an Equal Housing Lender.