What's My Price Range Another Stupid Question

What's My Price Range Another Stupid Question. I originally wrote this back in February of 2008 see: How Much Can I Afford / A Stupid Question I've brought it back because of an a very good series by my friend George Soto: First Time Homebuyer Seminar .............. Basic Openning Questions , First Time Homebuyer Seminars ................ Pre-Approval Process, First Time Homebuyer Seminars .............. Choosing A Realtor  and First Time Homebuyer Seminars .............. Shpping For A House

I'd have said it differently, but I agree it's good information. I have a problem though with the idea that a Loan Originator gives you a "Price Range"

You've reached that point in your life, somewhere between 18 and death, that you want a home of your own.

This is possibly the second most asked question in real estate, the first is "what's the rate?" How would your REALTOR® or Loan Originator know what you can afford? The Loan Originator can determine what you qualify for, but that has little relevance to what you can afford!

As you read about the mortgage crisis keep in mind except for the minority involving fraud each of those home owners had qualified for the loan! Qualifying and affording are not the same! Often not even close!

Only you, the home buyer can decided what you can afford. If your current rent is say $1,350.00 and you pay all the utilities you can probably afford close to that $1,350 each month. But, as the home owner you will now have to deal with maintenance expenses that the current owner takes care of. If each month you are able to save another $1,000.00 you might be able to afford as much as $2,350.00 per month.

If on the other hand you ask your REALTOR® or Loan Originator what do I qualify for, they will look at your gross income and apply a factor dictated by the loan program of 28%, 33%, 45%, 50%, or more. This may mean that you can get the loan, it doesn't mean that you can afford to make the payments.

Before you ask anyone anything, ask yourselves, what can I afford?

Start with your current rent, then determine what additional income you could add to it.

Are you saving money each month? Do you have long term bills being paid off?

Are you getting a raise?

Is there something your willing to give up that would save money? Are you really willing to give up anything?

Now that you've come up with your own number you need to ask yourself the questions no professional legally can. Do you really want to buy a home with someone you're not married to? Are you going to stay married? Mortgages are for 15, 30 or even 40 years, relationships are from now until the next argument, marriages sadly often are not much longer.

How would you make the mortgage payments if one of you moved out?

What if by plan or happenstance one of you should get pregnant? Would you be able to make the payments during and after pregnancy?

Now is the time to talk to the loan pro, and ask the proper question. "We can afford $2,500.00 per month principal and interest (the loan payment) taxes and insurance, what's the best program we qualify for and how much can we buy with our down payment and a new loan?

Your Loan Originator can't legally deny you any loan you qualify for, don't blame them if you can't afford the monthly payment!

Don't blame your REALTOR® they legally must sell you any home you want and can qualify for.

Only you can decided what you can afford!　

The Loan Originator Pre-Approves the you for the maximum loan amount, not what you can afford, what you qualify for under the scenario submitted,(Interest rate, taxes, Insurance, HOA, et. al.) not a range. HGTV would have you believe that it's easy to get another 5, 10, 15, 20,... 50% added to the loan amount, it's not!

You, the consumer can with the help of your Loan Originator set your own "Price Range" based on the payment amount you're comfortable making. The REALTOR® can set a "Price Range" based on the amenities and location, location, location. But, all the Loan Originator can do is set the maximum!

As a first time buyer you need to know that qualifying is totally different than living comfortably with a loan/home! No REALTOR® or Loan Originator can determine what you will be comfortable with.

You, the Consumer should look at your current housing expense and compare it to the projected expense your Loan Originator can provide and ask where the extra (If needed) is going to come from.

Approvals are based on averages, average lemmings buying homes with out considering what they can comfortably afford explains more about the problems you've been misinformed about that any thing else!

(Sorry George! If you'll forgive me I'll wave the advertising fees.)