Sometimes, a mortgage lender will consider you to be eligible for a much higher loan amount than what you would feel comfortable with. For example, lets assume you have very good credit score (720+) and a relatively low monthly debt ratio. Lets say your total monthly income is $10,000. We will also assume that you have only $1,000 in monthly debt obligations reporting to the credit bureaus.

In this scenario, the mortgage lender may well say that you are qualified to carry a monthly debt ratio of $5,000 (50% of your monthly income). This means they would lend you money on an estimated $500,000 home purchase, as the monthly mortgage payment would be around $4,000 including estimated monthly tax and insurance amounts.

In all reality, though, you may only feel comfortable paying $2,500 in monthly housing costs. Perhaps you contribute large amounts of money into a 401k for your retirement years; or maybe you are saving up for your childrens college tuition. These are all topics you will want to discuss with your mortgage professional, so he can help you determine the best home financing strategy for you.

All mortgage loan programs are designed to keep the borrower in a comfortable monthly payment range. If you are truthful with your mortgage broker and do not lie about income on stated income or no doc loans you should have a comfortable affordable payment. Although what is a comfortable monthly payment really is up to the individual borrower, the best option is to talk to your mortgage broker about monthly payment amounts and work out a budget to see if the amount you want to borrow fits within that budget.

If after careful financial evaluation, you realize you cannot afford the house of your dreams, don’t feel tempted to count on expected annual raises, thinking that eventually you’ll be able to afford the higher payments. Most raises are generally 4% to 7%. In bad times, you won’t get a raise, while inflation overtakes you. In the worse case scenario, you may get laid off and you won’t be able to afford your monthly bills. If you don’t have a budget that includes a savings account worked out on a spreadsheet, you are faced with a serious debt problem waiting to happen. If you cannot recite from memory all the creditors you owe and how much you owe them, you have a credit problem.

Many times people experience financial difficulties or situations that may require them to temporarily reassess their financial situations. Refinancing your home is a very common way to make it through these difficult periods. You can refinance your home for a number of reasons, whether it be to take extra cash out to help with medical expenses, cash out for any purpose, you need a lower interest rate to obtain a more comfortable or a more affordable mortgage payment, or you may even want to increase your mortgage term back up to a 20, 30 or maybe even a 40 year mortgage term. These are just a few of the many reasons to refinance. Refinancing to an interest only loan or an ARM loan are two very common loan types for consumers who are trying to find a temporary solution to a more comfortable mortgage payment. Consult a mortgage professional to find out how you can obtain a more comfortable or a more affordable mortgage payment today.

Many borrowers want to refinance to get the security of a long term fixed rate mortgage, but the idea of making a larger fixed rate mortgage payment can give them cold feet. "What if I have a bad month, get sick, or have a family emergency come up which reduces my income temporarily? Can I really afford this payment?"

This payment shock is especially pronounced when considering a 15 year fixed rate mortgage, but you may feel this way even if you are considering a 30 year fixed rate mortgage.

For borrowers conisdering a 15 year mortgage, look into a 30 year fixed rate mortgage and make a larger payment each month, paying off the loan at a rate comparable to the 15 year fixed rate option while allowing you to drop down to a normal, 30 year fixed rate payment if your finances get tight down the road.

While previously there were very few options for borrowers who sought the security of a 30 year fixed rate mortgage to retain the option of making a lower payment, new mortgages offering a "minimum payment" option are now available with long term fixed rates of 10 or even 30 years fixed, although they are only offered by a handful of companies. With one of these 30 Year Fixed Rate Cash Flow mortgages, you have the option of making a low, interest only payment when things get tight. If times get really tough, there is an even lower payment option which actually allows you to defer part of that month's mortgage payment until you can afford to catch up, with no penalties to your credit and no late payments haunting you for years to come. Please note that if you make a minimum payment on a 30 Year Fixed Rate Cash Flow Option mortgage, the amount which you decided to defer for the month will be added to your mortgage balance until you pay if off, and will accrue interest just like a home equity loan for the sme amount, but these fixed rate option payment mortgages can provide you with an extra layer of protection from the unpredictable.