Loan Approval vs. Comfort Level

Real Estate Agent with Thompson Company, REALTORS® MD594797

Buying your Maryland home - loan approval vs. comfort level

Reflecting back on the precrash market, buyers were a lot different than today. Back in those days it seemed to be less about finding a home than just a house.
It was the nature of the beast. We all started with the best of intentions, hunting for the home of our dreams. However, writing offer after offer, competing against 10, 15 other buyers took its toll.

'Lets just finally get something, we will figure out how to make ends meet later or how to turn it into a home.' Expectations were lowered, purchase price escalation clauses added, big compromises were made and in many cases buyers opted to go above and beyond their comfort range. [the role predatory lending played in all of this is another topic]

I admit that I struggled with some of my clients' decisions. I did not - and do not - want anybody to feel like they have to settle for just something but I also advise against going out of your comfort range. Your comfort level can be a whole lot different than your loan approval and it's important to take a close look at both.

You may qualify for a monthly payment of $2,000 but may feel like $1,800 ishome buying budget the most you can afford to keep your current lifestyle. Which one would you rather do - go to your max and cut back on the things you enjoy or keep on living the way you do and lower your house-buying budget? Cutting back on dinners or vacations may be worth it to some but not to others. Your comfort level is very personal but it should be an appropriate one and enable you to be financially healthy.

There can be many reasons why your comfort level may be lower than your loan approval. You may have a special savings account you contribute to monthly which is money you shouldn't calculate with. Or how about the $100/month you pay for your child's drama club or gymnastics? 

If the payment you are comfortable with is lower, you may have to make compromises somewhere else - without having to settle hopefully. You may not get everything on your wish list or the location you've dreamed about - but in the end opting for a three vs. a four bedroom home for example may be worth staying within your comfort range.

My advice: before you start house-hunting, get out your budget and figure out how much money you are truly comfortable with spending on your monthly payment - don't forget utilities and a little cushion for home repairs/improvement! 


Planning, Budgeting & Goal Setting:

Home buying wish list: the needs, the wants & the cravings
Optimist or Pessimist - which one are you?
The Path to Home Ownership

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Thompson Company, REALTORS

16910 Oak Hill Rd, Silver Spring, MD 20905
o: (301) 384-9177 c: (240)593-2860

Andrea is a REALTOR® based in Silver Spring, MD, who has enjoyed assisting buyers and sellers in Montgomery and Howard County, MD (and beyond) for 16+ years now. She always answers the phone with a smile, enjoys running, hiking, and traveling, speaks German, reads a lot, blogs a little, and drinks too much coffee. 


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 Andrea Bedard, Thompson Company, REALTORS: from Just Listed to Just SOLD


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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Bridget "Mortgage Mama" McGee 02/01/2012 03:27 PM
Home Buying
1st Time Buyers
Buyer Information - What Buyers Need to Know in Today's Market
Advice for Buyers
home buying
andrea bedard silver spring montgomery county howard county md realtor
budgeting and planning
loan approval vs comfort range

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Sonja Patterson
Keller Williams - BV - College Station, TX
Texas Monthly 5-Star Realtor Recipient for the Hou

Andrea, you're a girl after my own heart!  I caution buyers to "buy within or below their means".  Lenders can tell you how much you "can afford" TODAY, but you always want to plan to save some $$ for the unexpected job loss, medical emergency, the occaisional vacation, etc. :)

Feb 01, 2012 02:50 PM #1
Jeanean Gendron
The Address Realty - Redding, CA
Specializing in Selling Unique Properties

Andrea, what a good post. It is so important that we change our model and with the changes in our Economic picture, it makes sense to view the purchase of a home different. Streching versus long term comfort is our goal now. Good agents tell their clients to remain conservative in their purchase and leave that room for those special savings and some reserve for repairs and maintenance. I would suggest....but you are already featured. Yeah. Congrats!

Feb 01, 2012 03:10 PM #2
Bridget "Mortgage Mama" McGee
SWBC Mortgage 410-960-2061 - Baltimore, MD
Maryland Mortgage Mama NMLS#196068

Andrea,  This is SO important.  It's one of the first things I ask folks in an initial interview for their mortgage.  "Have you determined what a comfortable mortgage payment will be?"  What one qualifies for and what is comfortable can be two VERY different numbers. 

When folks come back to me with "more house", I always take them back to that initial conversation!

There is great budget information at  Too many folks forget about the higher utility bills, repairs, updates, and silly things like FOOD and furniture or even moving costs when calculating what they will need to spend when buying a home!

This is really important for folks to take to heart when searching for their first home or their last!  I am re-blogging!!

Maryland Mortgage Mama

Feb 01, 2012 03:22 PM #3
Andrea Bedard
Thompson Company, REALTORS® - Silver Spring, MD
M.A.; REALTOR® Silver Spring, MD and beyond

Hi Sonja: That's the right thing to do! I know my comfort level is considerably lower than what I could afford. Thank you.

Hi Jeanean: Hm... I'm not sure what you saw but a feature? Not on my page ... But thanks Jeanean! Conservative is the way to go when it comes to any major purchase but especially home buying IMO.

Hi Bridget: Thank you very much! I know you and I are on the same page and that's why we make a great team! Fact is that utilities are not going to get any cheaper .. so there needs to be a cushion for any increases (not to forget HOA or condo fees) that will still allow a comfortable life. Thanks for the link, I'll check it out!

Feb 01, 2012 03:23 PM #4
Cindy Westfall
Premiere Property Group,LLC Portland Metro & Suburbs Oregon - Tualatin, OR
ABR,GRI Your Tualatin & Portland Metro Real Estate

Hi Andrea, Your description of those days are spot on and sadly many buyers ended up buying way over their means and lifestyle and are now struggling. Your advice is excellent. The term "house poor" came about decribing those that have just enough money to pay the mortgage, but little else. As you said, some are willing to sacrifice, but this should always be something worked out before buying a home.

Feb 01, 2012 03:48 PM #5
Jeanean Gendron
The Address Realty - Redding, CA
Specializing in Selling Unique Properties

Andrea, I thought I was logged out and say you on the right. I must have been looged in and you had just posted. I suggested because this should be featured. This is a great post and such good work in advising anyone in this market. Let' look for that gold must be on the way. Silly rabbit.

Feb 01, 2012 10:42 PM #6
Mike Cooper, GRI
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Great advice, Andrea.  I do remember the "let's just get something" attitude during the hot days of the market.  Properties sold so fast, people seemed to be panicked into buying.  

Feb 02, 2012 12:13 AM #7
Andrea Bedard
Thompson Company, REALTORS® - Silver Spring, MD
M.A.; REALTOR® Silver Spring, MD and beyond

Hi Cindy: Thank you. "House-poor" is not a pretty state to be in. You want to be able to enjoy the benefits of home ownership but still have a life and a little cushion for those unexpected repairs or curveballs life throws at you.

Hi Jeanean: Thank you so much! It's fine. Gold star or not, this is an important topic that I just had to emphasize once again.

Hi Mike: Thank you. I didn't like the attitude but understand and was in a similar boat. We got so tired of competing that we ended up choosing a home that needed a bit more work but had less competition. We, however, like to do projects which is not everyone's cup of tea.

Feb 02, 2012 09:30 AM #8
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Andrea Bedard

M.A.; REALTOR® Silver Spring, MD and beyond
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