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We have multiple resources to assist you in getting the best loan for your purchase or refinance. Of course Lending Tree has a vast number of lenders who they are familiar with and work with so you can check with them by selecting the appropriate fields below and clicking "start now".
If you have any questions about what loan may be the best type of loan for you, please feel free to contact us.
In the current market, and in most circumstances, we highly recommend getting a fixed rate mortgage. You will have less flexibility with your payments and your minimum payments will be higher, but you can count on the payments remaining constant and budget appropriately. You may not be able to buy the more expensive house, but it is much less likely you will be forced to sell the house or lose it through foreclosure.
You can also view our mortgage calculator and reverse mortgages pages.
AOL has a good mortgage affordability calculator. The essential fields you may not be familiar with are the Front-end Ratio and the Back-end Ratio. The lowest ratio of the two determines the maximum payment allowed by the lender. In California, the higher front-end and back-end ratios are usually allowed. Your credit score also contributes to the allowable ratios.
The Front-End Ratio is defined as a ratio that indicates what portion of a borrower's income that is used to make mortgage payments. It is calculated as a borrower's monthly housing expenses divided by his or her monthly gross income and is expressed as a percentage. Monthly gross income is simply annual income divided by 12 (months). Lenders use the front-end ratio in conjunction with the back-end ratio to approve mortgages. The appropriate equation is shown below:
For example, if your annual income is $60,000, your monthly income is $5,000 (60,000/12). By using front-end ratio (28-36%), you can figure how much of that $5,000 you can allocate to your mortgage payments. If the required front-end ratio is 33%, you can allocate $1,650 (5,000 x 0.33). Thus, if your PITI is $1,550 or less, you would be approved.
Typical monthly housing expenses include the mortgage principal, interest, taxes and insurance payments known as PITI.
The Back-End Ratio or debt to income ratio is defined as a ratio that indicates what portion of a borrower's income that is used to pay all of his or her debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI), credit-card payments, child support and other loan payments. Lenders use this ratio in conjunction with the front-end ratio to approve mortgages. The appropriate equation is shown below:
For example, if your monthly income is $5,000 ($60,000/12) and your total monthly debt payments are $2,000, your back-end ratio is 0.40 or 40%. Generally, lenders like to see a back-end ratio that does not exceed 40%; however, there are lenders who make exceptions for ratios of up to 50% if you have good credit. Some lenders consider only this ratio when approving mortgages, as opposed to using it in conjunction with the front-end ratio.
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