Home » Finance

Home Loan Rate : What Can You Afford?

Jun 5, 2008
The question of what a home is worth versus what you can afford is one that can best be answered by reviewing some of the factors that go into the determination of what size of a home loan rate will best fit within your budget.

Amortization Schedule

The amortization schedule is typically a part of the loan documents package that you will receive when you sign the papers on your loan. The home loan rate amortization scheduled tells you each payment period what the amount of your total payment is and what portion of the payment goes toward principal and what portion is retained to pay the monthly interest. Each month, if the payment is monthly, the amount of the payment going toward the interest is smaller and the amount going to pay against the principal is larger. If you pay extra against the principal, the results are even more noticeable.

Income to Debt ratio

Another factor that helps you to know what you can afford is a measurement by the mortgage company when preparing the amount of your home loan rate. This is your income to debt ratio. Credit bureaus often include this figure in their report to the lender. The calculation to determine whether or not you qualify for one of the best rate loans depends on factors such as the income to debt ratio. In recent years, the debt to available credit has been used more widely to measure affordability of the mortgage loan.

Credit capability

The amount you can afford on your home loan rate is certainly driven by the credit history and capability of the prospective borrowers. The person with a high credit score can qualify for a better deal on the loan terms than one with a low or non-existent score. Even with a very good score from the credit bureaus, you should not over extend the size of the loan which you negotiate. By taking on too much debt, you can place yourself in a position where you are only a few days and a weekly paycheck away from being in trouble financially and those type of stressors are not healthy.

Market Value

The market value of the house you purchase is essentially whatever you are prepared to pay for the property. Your home loan rate doesn't depend directly on the market value, but indirectly is a factor in determining whether you can afford a specific loan and the terms associated with it. Sometimes the market value is based on what neighborhood properties that are similar in design are selling for. A real estate buyer's agent can help you to determine what the market value of a particular property would be.

Assessed value

The assessed value of the home doesn't have a direct bearing on whether you can afford the home loan rate of a specific piece of property, but it does make a difference indirectly. When the county tax assessor looks at the value of the house, it is known as the assessed value of the property. The assessed value is typically quite different than the market value of the property. The assessed value is driven by such things as the value of other houses in the neighborhood, and what the market price of the previous property sale was pegged at.
About the Author
Finding a web site that contains a wealth of resources to help you in your search for the best loan rate is not difficult. Just log in to Home Loan Rate or Home Loan and take advantage of all the tips, links and helps you will find there.
Rating:
Please Rate:
(Average: Not rated)
Views: 139
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources