How much can you spend?

October 26, 2011

Before starting your house hunt, be sure to visit a bank or mortgage broker to learn how much you can afford to spend.  By getting pre-approved for a mortgage you are then better prepared to begin your search for a new house and you are in a better negotiating position having that pre-approval in place.  Not only should you find out how much you can borrow, but also figure out how much you are comfortable borrowing.  Many times buyers will be told how much they can borrow and they go spend every last dollar of that pre-approval amount only to find out afterwards that they have gotten in over their heads and struggle each month to make their mortgage payments.  Living within your comfort range is important and only you can determine how much you are comfortable spending each month.  By getting pre-approved you can also get a mortgage rate locked in with a lender for a specified length of time (often 90 days).  This can save you a lot of money in interest if rates happen to go up while you are searching for a house.  The nice thing for you as a buyer is that if rates go down , then you will get the lower of the rates!  Visiting with a lender or broker will also let you know what you may need to do prior to beginning your house hunt.  Such things as paying off some debt, or saving more for your downpayment are better to be figured out ahead of time as opposed to finding this out after you have found the house of your dreams.  In short, visiting with a bank or mortgage broker will help you to be a more knowledgeable, and better prepared home buyer.