Buyers must have their financing ducks in a row before placing an offer on a HUD Home. Selecting a good lender is an integral part of the loan process. A lender will take a careful look at your financial circumstances and tell him how much mortgage you are qualified to receive. This is important to know and it is an important number to weigh against another number that is even MORE important, the maximum monthly mortgage amount you are comfortable paying, that will not cause undue hardship and a financial strain.
What are you paying in rent or toward another mortgage right now? Is that a comfortable number? What is the difference between the lender’s Qualifying Number and your Comfort Zone Number?
If the Comfort Zone Number is lower than the Qualifying Number, see how that number translates into a mortgage amount and use that number as a cap on a mortgage. After calculating the maximum mortgage amount, work according to a strict guideline in terms of your “comfort” price caps. Don’t even look at properties exceeding that level. Don’t even be tempted. There are two dangers in looking at properties with price tags that exceed your Comfort Zone Number:
Some buyers want to extend their financial reach. Buyers should be careful not to stretch their resources so much that they will be “house poor,” devoting too many monthly dollars to housing expenses. Counsel them to not sacrifice too much in other areas of their life to meet a high monthly mortgage obligation. Many people make this mistake. That is a primary reason there are so many HUD Homes for sale. People who live beyond their means fall into a high risk category, and sometimes they lose their homes when they cannot make ends meet. To compare area stats go to http://www.sflmarketinsider.com/mimarket/zip/33401/ .
More expensive houses appear more desirable in terms of location and amenities than properties with lower price tags. Lesser-priced houses may pale by comparison with higher priced properties, especially if you have spent time previewing higher priced homes.
Here’s my advice: Be kind to yourself. Keep your sights focused on a price range that you can afford right from the beginning. You will avoid having to “scale down” a search and “settling” for less than you want.”
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