If there is one thing New Mexico buyers should take away from the real estate meltdown it is a realization of the importance of purchasing something you can afford to purchase, as opposed to purchasing something you would like to purchase regardless of the cost. The days of no-doc loans and leveraging your assets to the hilt are gone. In today’s real estate market it is more important than ever to borrow what you can afford, no more.
According to an article at Yahoo Real Estate, “Mortgage lenders generally use a ratio of 36 percent as the guideline for how high your debt-to-income ratio should be. A ratio above 36 percent is seen as risky, and the lender will likely either deny the loan or charge a higher interest rate. Another good guideline is that no more than 28 percent of your gross monthly income goes to housing expenses.”
Keeping the percentage at 28% or lower can only improve your financial situation. Take a good hard look at your finances, look at your income and look at your expenses, both fixed and other spending habits. The most important thing is to be honest with yourself, avoid the adage of the “eyes being bigger than the stomach” and accept what you can afford in the current real estate market. In the long run you and your bank account will be better off for being realistic.
Click here and find helpful information on calculating an affordable mortgage