South Dakota is a wonderful place to live, and is also great for investors who are looking to purchase multiple rental properties, because interest rates are fairly low in this state. Therefore, you can afford a bigger home for the same amount of money as you would be able to afford in states like Texas, New York, and California. However, it is important to realize that, although you may be able to find cheap real estate prices, you probably will not make as much money in South Dakota as you will in other states. No matter how big of a home you want, you will probably need to find a South Dakota mortgage and home loan to cover the expense. Before you apply for a South Dakota mortgage and home loan, make sure that you can afford the payments. You can do this in a few easy steps, and this will prevent you from asking for a South Dakota mortgage and home that is too big and getting rejected.

• Calculate your monthly income. When you apply for a South Dakota mortgage and home loan, this is one of the first steps your lender will take as well. Income is calculated over the course of two years, and special conditions apply if you have a job such as teaching, where your income may vary depending on the season. Business owners are also calculated in a specific way. The best way to estimate this amount, however, is to gather the previous two tax returns you have and to add the totals together and divide by 24. This will give you a good estimate of your monthly income.
• Estimate how much you can spend on a mortgage every month. That doesn't mean pulling a number out of thin air—your lender will probably estimate that you can spend 33% of your monthly income on your mortgage. Therefore, once you figure out your monthly income, calculate how much you can spend every month on a mortgage.
• Look at your savings. How much can you manage for a down payment? Remember that you will need money for closing costs as well. Most lenders like a person to be able to pay 10-20% for a down payment, although some are willing to work with you if you do not have that much money. In any case, decide how much you can spend in this area.
• Find out the national interest rate. Of course, your lender's rate will be higher, so you can estimate the rate as more than the national average, but this will give you a good place to start.  Use the steps above to determine how much you can afford to pay every month and then multiply that by the number of months in your mortgage (either 15 years or 25 years in most cases). Use the interest rate to determine what percentage of that total amount will be interest and subtract that from the total. Add back to that amount the down payment you have saved, and you'll have an estimate of the largest loan amount you can afford for a South Dakota mortgage and home loan.
• Don't forget your credit history. If you have poor credit, the largest amount you calculated using the above process probably won't be possible. Large loans are risky for lenders. Bad credit proves that you may not be worth the risk, so if you have a bad credit history, it is important to ask for a smaller South Dakota mortgage and home loan.

Most lenders are willing to work with you, so finding a loan that meets your needs should not be too difficult. Remember to have your finances in order when you apply for a South Dakota mortgage and home loan. Ask for a loan that is small enough for you to afford, but large enough to cover the cost of a dream home. Want to know more? Fill out the form below and someone will contact you to talk about applying for a South Dakota mortgage and home loan today!