Income, Credit & Home Loans: Buying a House : Payment Shock Tips When Buying a House

Hello! My name is Brett staggs and on behalf
of Expert Village, I am going to be telling you what you can afford for a first time home
buyer. When applying for your first home loan and you are trying to figure out how much
house you can actually afford and you are dealing with someone at a bank or with a mortgage
broker, whoever you are working with, fill out your application and start the process.
They may say this term to you. They may say payment shock. Payment shock is very simple
even though it sounds kind of drastic. All it really is they look at how much you are
paying right now for rent, car insurance or whatever you may be paying per month. They
look at that number and then they look at proposed monthly expenses you are going to
have with your new home and calculate it. If those numbers are hugely different, there
is a big space in between so if you are paying $2,000 a month right now and when you get
this new house you are looking at and it is going to be $6,000, they are going to say
there is payment shock going on here which means if you get this loan, you are going
to be paying almost twice as much a month as you are paying now. Depending on your income
and on your assets, if they don’t support that payment shock, you might be declined
a loan. You need to be very aware of how much you are paying each month for any of your
expenses and how much your new home you are applying for is going to cost per month. Make
sure you see the difference between those two numbers because if it is really great,
it is going to be a problem.

Leave a Reply

Your email address will not be published. Required fields are marked *