Plan your mortgage

Well foreclosures were up 47% in March. Don't let that happen to you. If you are just planning to buy a home. Be one of the smart ones. Just because somebody will allow you to borrow 50% of your income doesn't mean you should.

50% of your income to go towards your house payment is too much. You are going to be house poor. You want to be in the 35% range. The only reason you should be stretched out that far is that you are going to get big raises in the next few years. Or you are a young professional like a doctor and you know for sure your income is going to rise dramatically.

28-38% used to be the range that banks would loan you. The banks like you to have reserves (savings). Do you have savings in the bank? Do you have 6 months to a year of savings to pay all your bills? For example do you have enough to pay all your credit card bills, car payments, cell phone bills, utility bills and house payments and taxes.

The good borrowers do, they have back up so they can pay their bills even in bad times. That's how they keep their good credit rating. I'm not saying you shouldn't buy a house if you don't have that much saved. What I am saying is that is what you want to strive for. Live within your means, feel relaxed, be able to take vacations, be able to help your kids through college, be ok if your have medical problems in life. You don't want to be that Walmart greeter. Sure it is ok to be the Walmart greeter at 70 years old because you want something to do, but it is a whole different thing to have to go to work so you can afford your house payment or be able to eat.

Too many people want the big beautiful house and the fancy cars. But think how embarrassed you would be to tell your family and friends that you lost your house in foreclosure. Be one of the smart ones in life. Once you start on this path you will be glad you did.

So when you are out shopping for a mortgage, don't ask how of a house can I buy. Instead figure out yourself what payment can you afford comfortably. Then ask your mortgage professional the interest rate and how big of a house that payment can buy.

May unexpected money come your way this week. For more mortgage information and Michigan real estate information go to www.russravary.com

Russ Ravary
"your real estate and mortgage specialist"