Q & A: Are you looking for a home and wondering how much house you can afford?
The answer most real estate experts give you is this: If you can afford to rent and you have cash for a down payment, you can probably afford to buy. However, in today’s mortgage market, it’s not always that simple. The easiest way to find out how much you can afford is to get prequalified or preapproved for your loan.
When you get prequalified for your loan, you essentially tell the lender (on the phone, in person, or online) how much you earn and what debts you have. The lender crunches those numbers through a formula and comes up with an actual mortgage amount that you can afford to support.
When you get preapproved, you will need to provide lender with documentation…current bank accounts statements, a few most recent paystubs, the past two year’s income tax forms…. This is when choosing the right lender to work with helps your home buying experience tremendously.
There is a big difference between getting prequalified and being preapproved for a loan. When you are preapproved, the lender is actually committing, in writing, to funding your loan, provided the house appraises out in value (and assuming that your paperwork checks out). A prequalification carries no commitment from the lender, but you have an idea of what you can afford.
If you have any questions on how you can learn what you can afford, please feel free to contact one of our many experienced Mortgage Professionals.
They can discuss your options and walk you through the home financing process.
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