First-time home Buyers typically share one common worry: will they be able to afford their own home? Of all the worries I encounter when helping a Buyer, this is often the easiest to address! One of the great things about the home buying process is that it is unlikely you will be able to finance a home that you truly cannot afford.
Addressing a Buyer’s financial concerns is usually a fairly straightforward process. A lack of information is what is at the root of their anxiety. There are a few different tools to help Buyers determine how much house they can afford.
Getting a mortgage pre-approval is one of the first things I send my Buyers to do. A mortgage pre-approval will help Buyers to determine how much home they can afford. When they meet with a qualified lender, like a Bank or a Mortgage Broker, the lender will review their income, assets and liabilities, as well as their credit report. The lender will factor in additional things such as the down payment amount, stability of employment, and current mortgage rates. Pre-approval does not mean you are guaranteed to get a mortgage, but it is a critical first step!
I also recommend that Buyers track their income and expenses for a few months to help establish what they can afford for a monthly mortgage payment. This is a great opportunity for Buyers to really see where their money is going and identify areas where they can save or reallocate funds.
Buyers are often concerned that they might overpay for a house. I share market statistics and review comparable properties with Buyers to determine if the list price and their offer represent fair market value. In addition to this, the lender will conduct an independent appraisal of the home to determine its value. If it looks like you may pay too much for the home, the lender will not provide the mortgage loan.
Another tool that Buyers can use to figure out how much home they can afford is my online mortgage calculator. Using the calculator, Buyers can play around with factors such as house price, down payment, mortgage length, and annual interest rate to see how overall mortgage costs are affected.
It is absolutely normal for Buyers to wonder and worry about how much home they can afford. There are plenty of tools available to provide information and address this concern. Contact me and I will help you get started!