Get a Mortgage Pre-Approval
An important ingredient in a successful home search is knowing how much you can afford. You don’t want to fall in love with a property only to find out it’s outside your price range.
That’s why I recommend getting a Mortgage Pre-Approval. This is a document from your bank or other lender stating how much of a mortgage they are willing to give you. There are two advantages to getting this pre-approval:
- It gives you the peace-of-mind of knowing you can afford homes you view on the market, and won’t have problems arranging financing.
- It’s a sign to sellers that you are a serious, prepared buyer – which gives you the edge when making an offer.
You should always consult with a professional mortgage advisor (not your typical order taker at the bank). And please remember that not all banks are created equal. Some banks can be great for your day-to-day banking, but have a reputation as terrible mortgage lenders. Therefore, please ask either me or your friends and family for mortgage banker recommendations. A mortgage banker will advise you and let you know your qualification, how much home you can afford, what your monthly payments will be and what you should expect throughout the home buying process. I’m well-connected in the local real estate scene, so if you want me to recommend a reputable broker or lender, please contact me.
How Much Home Can You Afford?
Banks and lenders use specific criteria to determine how much of a mortgage they’re willing to offer you. They look at your income, expenses, credit history and employment status, as well as the down payment you plan to make on a home. It may seem like a scary process, but it is actually straightforward. You can usually get a Mortgage Pre-Approval in a day. You’ll be glad that you did.
By knowing what you can afford, you can confidently shop within that price range. For example, if you qualify for a $250,000 mortgage, and you have another $100,000 available as a down payment, you can look for homes in the $350,000 range. A homebuyer should typically be able to afford a home that is 3 to 3.5 times your annual salary (or income). Another general rule is your total monthly expenses (including the new home) should never be above 45% of your gross (pretax) income. For a first-time home buyer, we typically recommend for this ratio to be 35% or less.
Click here to learn about my favorite mortgage brokers servicing our area.
Have questions about arranging financing? Please submit the form below or call or email me.