As the mortgage industry still struggles with the record number of foreclosures nationwide
there is a great deal of finger pointing to what caused this mess.  There are a couple of simple
rules that the mortgage industry has used for years for qualifying potential home owners:
The 28 Percent rule:
Based on a 30 Year mortgage the total mortgage payment including principal, interest, taxes
and insurance should not exceed 28 percent of your monthly household income.
The 36 Percent Rule:
When you add up your total debt (high-interest credit cards, school loans, car payments, etc.)
you should not plan on spending more than 36 percent of your total monthly income on outstanding debt and mortgage combined.
Following these simple rules will help ensure you do not get caught with a payment you can not afford to pay.
I look at rental financing in two ways, income and growth.  We are in a declining market so we know the short term growth is not there.  That being said there is a huge potential (if you can get the financing) for income and long term growth.  For years I was buying properties when we saw annual double digit property value increases I still looked for the cash flow.  When I went to refinance in most cases I would just do rate and term or the minimum financed amount to ensure equity and cash flow.
In this current market if your property is not cash flowing you are basically working for free!

Chris Yatooma, President
Real Estate Investors Association of Oakland