An important ingredient in a successful home search is knowing how much you can afford. You don’t want to fall in love with a property only to find out it’s outside your price range.
That’s why I recommend getting a Mortgage Pre-Approval. This is a document from your bank or other lender stating how much of a mortgage they are willing to give you. There are two advantages to getting this pre-approval:
It gives you the peace-of-mind of knowing you can afford homes you view on the market, and won’t have problems arranging financing.
It’s a sign to sellers that you are a serious, prepared buyer – which gives you the edge when making an offer.
You can arrange for a Pre-Approval with your lender, or by working with a good mortgage broker. If you need suggestions for a lender or a broker, let me know - I'll be glad to recommend a few.
How Much Home Can You Afford?
Banks and lenders use specific criteria to determine how much of a mortgage they’re willing to offer you. They look at your income, expenses, credit history and employment status, as well as the down payment you plan to make on a home.
It may seem like a scary process, but it is actually straightforward. You can usually get a Mortgage Pre-Approval in a day, and you’ll be glad you did. By knowing what you can afford, you can confidently shop within that price range. For example, if you qualify for a $250,000 mortgage, and you have another $100,000 available as a down payment, you can look for homes in the $350,000 range.