Shopping for a Mortgage in Today’s Rate Environment
There are literally hundreds of mortgage programs available at any given time. Find out what local lenders – a bank or credit union, for example – offer, but keep in mind they may offer a number of programs. Online mortgage providers and mortgage brokers who work with multiple lenders will be able to compare mortgage rates and programs from numerous lenders to help find the one that best fits your needs. Programs and rates change all the time, so it’s helpful to work with a lender with access to up-to-date information on multiple programs. Don’t worry too much about hurting your credit by shopping for a mortgage. Get your free Credit Report Card before you start.
Your lender will compare your gross income (before taxes are withheld) to your debts to calculate your “debt-to-income” ratios. Ideally, the monthly payment on your new mortgage loan (principal, interest, taxes and insurance) should total 28% or less of your monthly income, though some lenders will go as high as 40%. Your total monthly debt payments, including your mortgage and payments on student loans, credit cards, or auto loans, should total no more than 36% of your monthly income, though some lenders will go higher.