When purchasing a home, it is absolutely crucial to understand the financials. Many buyers rush into the process before getting a clear understanding of what they can afford. After all, it is fun to look at beautiful homes online and daydream about living there! But, often we find that buyers are way off when it comes to price point and what they can afford. So how do you determine that before you fall in love with a home outside of your price range? Here are a few things to consider.
When determining how much you can spend on buying a house, we find that monthly payments for most buyers is the best place to start. Everyone would love to buy the home of their dreams, but at what cost? You don’t want to sacrifice your day to day life just to own a beautiful home. You still want to be able to travel, dine out, attend events, and generally enjoy your life. So, start there! Figuring out what monthly payment you are comfortable with and working backwards from there is a great place to start.
Once you determine the monthly payment you are comfortable with, it is time to speak with a loan officer. Not all monthly payments are equal when it comes to purchase price. Your mortgage payment can vary greatly depending on a number of factors, such as your initial down payment, your interest rate, mortgage insurance, or an HOA just to name a few. So, it is important to speak with a reputable mortgage lender early in the process to fully understand what your purchase price can be, with the monthly payment you are comfortable with.
Once you have determined your monthly payments and spoken with a loan officer to figure out your purchase price, it is time to get fully pre-approved for a loan and start looking at homes! This is where the fun begins! We always find it is best to get fully pre-approved before you start looking at homes. Nothing is more frustrating to a buyer than to find the home of their dreams and not be able to submit an offer because they have not gotten fully pre-approved. However, nothing is more exciting than finding your perfect home and submitting that offer!