How Much Home Can I Afford?
For many buyers, this is a tough and stressful question. Meet with a local Realtor® to develop a preliminary list of your needs and preferences. A Realtor will review available properties that match your needs so you can get an idea of what is available at different locations and price levels.
Next, meet with a mortgage professional to discuss your current finances and investigate your financing options. If you're not sure which lender to visit, shop around or ask your Realtor for referrals. Once you select a lender, ask for a mortgage pre-approval. A pre-approval is a simple calculation that tells you the amount you'll be able to finance. It also will help you calculate what your monthly payment might be. A pre-approval also provides you with valuable documentation that can be instrumental in showing sellers that you are serious and able to purchase their home.
Once you know the amount of money you can borrow, you'll need to determine what you can afford in terms of a down payment. While 20% is considered a "safe" number in the eyes of a lender, there are numerous financing options – especially for first-time buyers. No matter what financing option you choose, bear in mind that your monthly costs not only consist of mortgage payments, but also real estate taxes, homeowner's insurance and utilities. If you need help figuring these numbers into your monthly budget, ask a Realtor. There is no cost for the above assistance.
