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Monthly Payment and Income
How much loan can you qualify for based upon your income? Historically, this has been the major concern for most first time homebuyers. Typically, lenders insisted that you meet strict income to debt ratios. Today, however, much has changed for many types of loans.

A few years ago the two biggest purchasers of loans in the United States, the Federal National Mortgage Association (FNMA) and The Federal Home Loan Mortgage Corporation (Freddie Mac) built their own automated underwriting programs. These systems take a host of factors into consideration besides debt to income ratios. Essentially, what they are trying to ascertain is whether the borrower will make the payments or not.

Consequently, for many (not all) programs, ratios are not as relevant as they used to be. At Cherry Creek, we have seen some previously unacceptable ratios sail through the underwriting process with flying colors.


The Main Issue

What is critical for you to decide is how much monthly payment you are comfortable making every month. Our "Pre-Purchase Consultation" with you will involve a serious discussion about your comfort level.

We have found that this varies with every individual:

1. If you are a risk taker, you may be confident that your income will rise in the future. Consequently, you are willing to take the maximum approvable monthly payment..
2. If you are a moderate risk taker, you, if confident of future raises, may be able to slightly exceed what is truly comfortable for you. There is no way you would far exceed your current level of comfort as the risk taker would.
3. If you are conservative, you probably will want to stay very close to your comfort level for your monthly payment. However, we may be able to show you how, with your future earnings potential and subsidy from Uncle Sam, you may be able to afford a more expensive home than you think.

At the consultation, we will analyze your current financial situation, look at the likelihood of increasing or decreasing income, estimate future financial obligations like an increase in family size, college tuition, show you the tax advantages of home ownership; and ascertain your acceptable level of risk.

From this discussion you will be able to decide which mortgage payment is right for you. This is a critical issue to be resolved before you look for homes. The worst situations we see are those when a home is bought higher than the client's comfort level, causing stress on the individual and the family.

Our goal at Cherry Creek is to get you approved for the payment that meets your maximum comfort level.

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