The length of time you are actually in the home before you sell or refinance has a direct influence on the effective interest rate you ultimately get. For example, if you move or refinance after three years instead of 30, after having paid two points at the loan closing, your effective interest rate for the loan is much higher than if you stay for the full loan term. Want to know how to manually calculate the interest payments on mortgages? Qualifying for a loanthe 28/36 ratioin order to qualify for a mortgage, most lenders require that you have a debt-to-income ratio of 28/36 (this can vary depending on the down payment and the type of loan you're getting, however). This means that no more than 28 percent of your total monthly income (from all sources and before taxes) can go toward housing, and no more than 36 percent of your monthly income can go toward your total monthly debt (this includes your mortgage payment). The debt they look at includes any longer term loans like car loans, student loans, credit cards, or any other loans that will take a while to pay off. Here's an example of how the debt-to-income ratio works: suppose you earn $40,000 per year and are looking at a house that would require a mortgage of $800 per month. According to the 28 percent limit for your housing, you could afford a payment of $933 per month, so the $800 per month this house will cost is fine (only 24 percent of your gross income).

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