If you are in the market for a home, you have probably wondered how much, if anything, you can actually afford. In this market, your Real Estate agent will get you preapproved for a loan, before even searching for a home for you. This ensures everyone in the transaction that you are in fact qualified for a loan. Not to mention gives you both an idea where you stand as far as how much you can pay on the home each month and how much down payment you will have to come up with.
The preapproval will usually give you an estimate of what price range you can afford to search for homes in. This will differ based on the individual’s income, expenses and any outstanding debt. You can actually figure this out on your own, before even consulting with a Realtor. First get a total of all your income, if you have a spouse include theirs too. Then you will want to get a total of any outstanding debt you have. Credit cards, car payments just to name a few. Most lenders and agents will probably tell you that you can afford 2 ½ times your gross income. Again, they will be able to work with you to see what your price range is.
Prior to getting prequalified, you will want to check your credit score. You can obtain a copy of your credit report for free online or your lender can provide you a copy of it at the time of your prequalification. Finding out your credit score is important in getting funding for a loan. Lenders want to make sure you have a good credit standing.
The Lender will do all the numbers for you, so if math isn’t your thing call your lender today. They will be able to determine everything down to exactly what you can afford for a monthly mortgage payment.
Once you are prequalified, you can begin searching for your home. You can also work with the lender to become preapproved for a loan, so that once you find your home you can precede with the purchase. It speeds things up so to speak. During this process you will actually fill out a loan application and provide the lender with necessary documents. Keep in mind, you will be given a deadline to purchase your home, if you get preapproved before finding your home.
There are many ways now that make it easy for an individual to purchase a home. As long as your credit and finances are in order you should have no problem affording a home. Today there are so many low priced homes on the market, as well as first time buyer benefits that should be taken advantage of.
It is important to know how much you can afford before starting the search. You don’t want to waste your time, or your agent’s time looking for homes that are simply not in your price range. Homes are going fast these days, so there really is no time to waste.