FAQ#7 - How Much Can I Afford To Spend On A Home?

Real Estate Broker/Owner with New Paradigm Partners LLC EB #1326335

For us, this is an easy question, simply because we're not the ones you need to talk to.

Mary and I are experts in residential real estate. We can help you find, and buy, the home that's just right for you and your family. We''ll get you through the home buying experience with a minimum of hassle and a maximum of clarity, and we'll make it fun in the process.

LenderBut before we can get started on the search, you'll have to talk to a lender, and one of the most important reasons why is to get an answer to the question above. In strict confidence, they'll take a look at your financial situation, and based on what's happening in the financial world today, they'll tell you how much of a mortgage you'll qualify for, along with how much money you'll need for a down payment, and what your closing costs are expected to be. They'll explain how much your monthly payment will be and go over any other conditions of the loan.

Once you know what the lender can do, you're almost ready to get started. There's just one detail left, and it's an important one. Sit down and look at the lender's numbers again. Pay particular attention to two of them: How much money will you need to get into a home? And how much will your total monthly payment be? Ask yourself if these two numbers work for you?

Sure, the bank will lend you that much. But you want to think about whether that obligation will require significant changes in your lifestyle. Will it leave enough for other things you might also consider important, such as family vacations, entertainment and savings? Are you comfortable looking at those numbers?

If the answer is yes, then let's get started looking for your perfect home. If not, then fiddle with the numbers until you get them to the point where you are comfortable, and that's where we'll begin our search. We'll still find you the perfect home.

Now if you had asked us instead where to find a great lender, that's one we can definitely answer and it's also easy. Give us a call and we'll be happy to recommend someone you can count on to be professional, responsive, diligent, competitive and completely reliable - we'll recommend the same lender we use, and we guarantee you'll be pleased.

Posted by
Mary & Dick

Mary & Dick Greenberg
New Paradigm Partners LLC
2601 S. Lemay Ave. #41
Fort Collins, CO 80525


Data Source: IRES MLS


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Fred Hernden, CMI
Superior Home Inspections - Greater Albuquerque Area - Albuquerque, NM
Albuquerque area Master Inspector

Dick, it used to bother me when I would be interested in buying anything that required financing and they would tell you "you can afford this". I just kept telling myself that I knew my budget and financial situation better than anybody else could possibly, so I would be the one that decided if I could afford it or not. I think that's what happened back in the housing boom when lenders were telling people they could afford those homes when actually they could not afford them... and they couldn't, thus the glut of foreclosures. Reality.

May 31, 2012 11:48 PM #1
John McCormack
Albuquerque Homes Realty * www.AlbuquerqueHomes.com - Albuquerque, NM
AlbuquerqueHomes.com, Albuquerque Homes Realty

Indeed pre-qualifying makes the world a much better place to live!  Hope you and Mary enjoy a productive day my friend.

Jun 01, 2012 12:01 AM #2
Michael Jacobs
Coldwell Banker Residential Brokerage - Pasadena, CA
Los Angeles Pasadena Area Real Estate 818.516.4393

Hi Dick -- good point!  Just because a lender or mortgage broker tells a buyer he/she is approved for a mortgage of "X" --- who cares?  That's just the first step.  A buyer's comfort level with that amount and the payment is a crucial part of this equation.  

Jun 01, 2012 12:36 AM #3
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORSĀ® in Clark County, WA

And, I see time and time again, folks forget the cost of maintaining a home. You've got to have the budget to keep up with things - never compromise a lifestyle and peace of mind for a darned house, especially when there are so many affordable options.  ;)

Happy Friday.

Jun 01, 2012 02:15 AM #4
Anna Banana Kruchten CRB, CRS, Broker
Phoenix Property Shoppe - Phoenix, AZ
Arizona's Top Banana of Real Estate!

Dick what buyers can afford is one thing and what they can manage comfortably and still have a life is another thing. Many times I tell buyers to 'pencil out' the real costs of home ownerhip to see what it will really be like. Great FAQ post for buyers!

Jun 01, 2012 02:31 AM #5
Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

Dick,  It is so important to get pre-qualified before starting that home search.  I don't even put them in the car until I know they are loan worthy.  No sense looking at homes they can't afford.

Jun 01, 2012 03:08 AM #6
Chris Hardy
Elevations Real Estate, LLC www.BuyFortCollinsHomes.com - Fort Collins, CO
Northern Colorado Real Estate

Dick - What you're proposing is fiscal prudence and restraint based on solid analysis and advice from recognized experts.  That just seems un-American! [Snark added for emphasis]

Jun 01, 2012 03:19 AM #7
Don Sabinske
Don Sabinske, Sabinske & Associates Inc. - Zimmerman, MN
Sabinske & Associates Inc.

Oh, yes.  The paying for it part.  The part that sometimes buyers don't want to face, but they must if they want my professional services.  Great post.  as usual.

Jun 01, 2012 06:00 AM #8
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy


Very well written post, and I think you are giving great advice on this, and Debb made a good point about having reserves for managing the costs of maintaining a home...A

Jun 01, 2012 06:26 AM #9
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Good Evening Dick, very nice blog in your FAQ series. Itis important for buyers to know what to expect and to work with an experienced agent who can guide them through the buying process. I am a little late getting to read blogs tonight with such a busy day. Have a Great Friday

Jun 01, 2012 09:05 AM #10
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Dick Greenberg

Northern Colorado Residential Real Estate
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