When looking to buy a home and get a mortgage, an important first step is to answer the important question of, how much mortgage can I afford? Some people want to purchase as much of a home as their pre approval limit will allow without going over their comfort level or having stress with cash flow.
There are a number of factors you need to account for when asking how much mortgage can I borrow?
Knowing the answers to these questions will assist with the planning of getting on a mortgage. Plus, you will also see what funds you have on hand for the mortgage and other responsibilities in life. As well as, you will see if you will need to make changes to your lifestyle or day to day spending happens as well.
How much mortgage can I afford? Completing a budget is a great first step in answering this question. This will help you discover how much money you currently have left over after all your expenses and knowing how much money you have to leave over for a mortgage after your current obligations will help.
Once you have the total of the funds that you can use towards the purchase, you will need to subtract the closing costs of buying a new house. Also, any extra funds that you may need for emergencies or unexpected expenses with the new house or to help furnish the new house. What is left can be your possible down payment total.
Learn more: What is the Home Buyers’ Plan (HBP)?
Learn more: Closing Costs To Consider When Purchasing a Home
After you have figured out how big your down payment will be, you are on step closing to knowing how much you can afford.
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How much mortgage can I afford? If your bank declines your mortgage application that may be a sign that there are parts of your finances that need to be improved. Or, parts that need to be changed before you buy. If you still feel like you are ready to buy and afford a home, then talk to a mortgage broker as they can review alternative lending options with you.
It can be upsetting when a bank declines you. However it’s important not to venture into buying a house before you are ready.
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With determining your down payment and finding out how much a lender will lend you, this will help you know what price of house you can afford. If you feel this is more than enough for your needs then you can reduce the amount and if it’s not enough then you can look to options like adding a co signer.
Learn more: Cosigning For a Mortgage
How much mortgage can I afford? If you have not owned a home before or are moving to a bigger home, knowing the household bills upfront can be hard. It’s important to budget for these extra costs.
To apply for a mortgage, I invite you to contact me today to review a budget with you and to answer the question, how much mortgage can I afford?
Get your mortgage off your mind. Contact me.