Mortgage Help   Mortgage Rates Real Estate Credit Foreclosure Tax Mortgage Rates Mortgage Basics Chapter 1: How much house can you afford? Homeownership Should You Buy or Rent Summary   Chapter 2: Adjustable-rate mortgages ARM and a fixed-rate mortgage Fixed-rate mortgages Understanding the key elements Which type of lender is right for you? Other types of mortgages Subprime Summary   Chapter 3: Your credit score Down Payment How lenders set rates Low down payments Mortgage insurance Your mortgage payment Mortgage Points Summary   Chapter 4: The good faith estimate Inspection and Insurance Necessary paperwork for a buyer Other lender paperwork Paperwork and fees Prequalification and preapproval Special circumstances Summary   Chapter 5: Ten questions to ask Turned down for a mortgage Underwriting What lenders ask Summary   Chapter 6:  Understanding the closing process Escrow Summary   Chapter 7: When your mortgage is sold Avoiding foreclosure Paying ahead Payment changes Refinancing Removing mortgage insurance Summary Summary   The purchase of real estate is both an investment financially and emotionally. While you can find greater returns for your money, this investment provides you with a house to live in and a place to call home. There are many benefits to owning a home, including tax breaks for having a mortgage on the property. But homeownership isn't right for everyone. When your plumbing goes wrong or roof leaks, you will have to pay for the repairs. While renters can come and go, selling a home often takes time and money. You don't have to be stuck in renting or homeownership, there are alternatives. You can purchase a home through seller financing, lease with option to buy and contract for a deed. Often, it all comes down to not if you want to buy, but how much you can afford to buy. Most mortgage lenders will only qualify you for a home mortgage if your monthly housing payments will remain below 28% of your monthly gross income. The monthly housing payments include the principal, interest, property taxes, mortgage insurance and homeowners insurance. This amount is often referred to as your housing expense ratio or front-end ratio. The total sum of all of your monthly debt expenses should remain below 36% of your monthly gross income in order to secure a mortgage. This is called the debt-to-income ratio or back-end ratio. The debts include your housing payments, auto loans, credit card debt, student loans, child support, alimony and other loan obligations. The ratios are simply a guideline that most lenders follow. Each homeowner is considered independently. Some may qualify for loans that allow higher ratios. For example, if you have no other debt, you may be able to get a loan with a higher front-end ratio. When you apply for a mortgage, the lender will need to know an estimate of how much you will pay for property taxes and homeowners insurance. These and other key elements of monthly mortgage payments are defined in the next chapter.