Congratulations! You've decided you want to buy a home. What should you do first? What next? Since I am a Realtor, I think that you should interview real estate agents as your first step to find that person who is going to guide you through the process. Next is finding a lender to get you prequalified for a mortgage and give you guidance on how much that mortgage is going to cost you.
The lender is going to tell you how much you can afford, based on your income and debts, credit history and credit score, and the current mortgage rates. That's his job. Probably the lender will approve you for a mortgage that is somewhere between 28 and 35% of you monthly income. (The more debt you have like credit card debt, car payments and student loans, the less of a mortgage the lender will approve you for.) But.... Just because you can qualify for a certain mortgage amount doesn't mean that you need to spend that much. (As your Realtor, I won't ever push you to overspend.)
When applying for a home loan, it’s important to keep in mind how much monthly mortgage you feel comfortable paying. Consider how your mortgage payment will fit in to your overall monthly expenses and family budget. Look at your take home income and factor in not just the mortgage and utilities, taxes, and insurance, and then add in your monthly retirement savings contribution, payments to your emergency fund, your vacations, your treats like new clothes or dinners out, and anything else that you budget or plan for. How much will you enjoy that new home when you need to eat Ramen noodles every night?
Particularly if this is your first home, it is a good idea to keep your mortgage payments to a manageable level - and you are the only one who can determine that! If this sounds good, lets talk. I would love to recommend some good lenders to you and I would be happy to explain the home buying process if you have any questions. Please give me a call at 240-401-5577 or email me at lise@lisehowe.com.
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