Whether you’re using a low documentation mortgage or a more traditional loan option, how much money you can borrow will come down to a number of factors.
Of course, there’s a big difference between how much money a lender may make available to you and how much money you can comfortably afford to repay.
Calculating your income
The amount of money your household brings in each month will play a major role in how much you can borrow. After all, it wouldn’t make much sense for a lender to loan you hundreds of thousands of dollars if you couldn’t realistically keep up with the repayments.
Other personal financial factors, such as savings, debt and credit worthiness will also play a big part in how much money you can borrow.
Determining the home value
Home loans aren’t personal loans, however. Ultimately, how much money your lender provides you with will depend on the home you wish to buy.
Not only its cost, but how much it’s actually worth. If the home is valued at less than what it’s being sold for, your lender may not give you the funds you need.
Finding the right figure
Even if you are able to borrow a certain amount of money, it doesn’t necessarily mean it’s the right choice.
Being eligible to take out a loan worth hundreds of thousands of dollars isn’t the same as being able to repay it easily.
When finding out how much money you can borrow, be sure to determine how much you can borrow without stressing yourself out over meeting monthly repayment obligations.
Also keep in mind that low doc loans may come with higher interest rates and establishment fees when compared to conforming loan products. This is something you’ll need to account for when budgeting.
For more information on how low doc loans can help you, contact the specialists at Redrock.