You've taken the first step, making the decision to buy a home, but have yet to decide on a budget. Not so fast, old buddy - don't make that home purchase without taking into consideration the amount of mortgage payment you can afford.
A Refresher On Mortgage Payments
Talk to a mortgage lender who is experienced and in the know - he or she will give you a better idea as to how much you can afford. Then you will want to go to the process of applying for a loan, but only to the point where you are to get a pre-qualification letter. The pre-qualification letter will give you and the seller alike a figure, a cap for the amount of the home loan you could make.
All right, so you've got the pre-qualification letter - is that really the amount you can afford? Rhetorical answer - too early to tell. The prequalification letter is based on a number of factors such as your earnings and credit. It is not based on a picture of your life, which can lead to problems.
Other - And Bigger? - Expenses
There is nothing worse than buying a home and straining to make the monthly mortgage payments. Optimism is all well and good, but it must be tempered - remember not to think of the pre-qualification letter as gospel word. You may have purchased your dream home, but don't let the payments be a nightmare.
Think of your finances before you figure out your outlay and finalize your budget for your impending home purchase. Your financial situation may be copacetic as you speak, but there may be expenses to be made in the future that could unexpectedly tighten the belt. Such situations might include:
Are you planning to have more children in the near future?
Are your elder children going to, or currently attending college?
What is the financial forecast, if you are a business owner?
If you are a corporate employee, are you confident that your job is secure with no chance of retrenchment or layoff?
And is the trend of downsizing causing concern for your business or the company you work for?
If you are the sole bread winner, what would happen if you were unable to work for a few months because of health issues?
Wake up and smell the coffee - you do not want to over-extend your mortgage, so ask yourself the questions above that apply to you. Every situation is different, so make sure you take a careful look at your life to make sure you are committing to a loan you can afford now and in the future.
A Refresher On Mortgage Payments
Talk to a mortgage lender who is experienced and in the know - he or she will give you a better idea as to how much you can afford. Then you will want to go to the process of applying for a loan, but only to the point where you are to get a pre-qualification letter. The pre-qualification letter will give you and the seller alike a figure, a cap for the amount of the home loan you could make.
All right, so you've got the pre-qualification letter - is that really the amount you can afford? Rhetorical answer - too early to tell. The prequalification letter is based on a number of factors such as your earnings and credit. It is not based on a picture of your life, which can lead to problems.
Other - And Bigger? - Expenses
There is nothing worse than buying a home and straining to make the monthly mortgage payments. Optimism is all well and good, but it must be tempered - remember not to think of the pre-qualification letter as gospel word. You may have purchased your dream home, but don't let the payments be a nightmare.
Think of your finances before you figure out your outlay and finalize your budget for your impending home purchase. Your financial situation may be copacetic as you speak, but there may be expenses to be made in the future that could unexpectedly tighten the belt. Such situations might include:
Are you planning to have more children in the near future?
Are your elder children going to, or currently attending college?
What is the financial forecast, if you are a business owner?
If you are a corporate employee, are you confident that your job is secure with no chance of retrenchment or layoff?
And is the trend of downsizing causing concern for your business or the company you work for?
If you are the sole bread winner, what would happen if you were unable to work for a few months because of health issues?
Wake up and smell the coffee - you do not want to over-extend your mortgage, so ask yourself the questions above that apply to you. Every situation is different, so make sure you take a careful look at your life to make sure you are committing to a loan you can afford now and in the future.
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