Arranging Financing

Get a Mortgage Pre-Approval

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 we recommend getting a Mortgage Pre-Approval. This is a document from your bank or 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, and
  • 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 Mortgage Pre-Approval with your bank or mortgage broker. We’re well-connected in the local real estate market, so if you want us to recommend a reputable broker or lender, please contact us.

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. You’ll be glad that you did.

Not wanting to be “house poor,” many home buyers choose to spend less than lenders are willing to loan them. That’s because there are many expenses that are not factored in when the loan amount is determined. Please note, lending ratios are based on gross income, not net income, so the formulas they use do not factor in the cost of taxes (other than income tax), FICA deductions, health insurance premiums, and other employment benefits, all of which could be as much as 30% of your paycheck.

Other significant expenses are also not part of the equation. The list includes, but is not limited to, the following:

  • Saving for children’s college
  • Saving for retirement
  • Maintaining and/or improving the property
  • Paying for utilities
  • Paying association fees
  • Furnishing and decorating your home

If you have any questions about this, please ask. We want to be sure you have the information you need to make the decision that is right for you, your family, and your budget.

By knowing what you can afford, you can confidently shop within that price range. Have questions about arranging financing? Please submit the form below or call or email us.

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