FAQ#7 - How Much Can I Afford To Spend On A Home?

By
Real Estate Broker/Owner with New Paradigm Partners LLC EB #1326335

For us, this is an easy question, simply because we're not the ones you need to talk to.

Mary and I are experts in residential real estate. We can help you find, and buy, the home that's just right for you and your family. We''ll get you through the home buying experience with a minimum of hassle and a maximum of clarity, and we'll make it fun in the process.

LenderBut before we can get started on the search, you'll have to talk to a lender, and one of the most important reasons why is to get an answer to the question above. In strict confidence, they'll take a look at your financial situation, and based on what's happening in the financial world today, they'll tell you how much of a mortgage you'll qualify for, along with how much money you'll need for a down payment, and what your closing costs are expected to be. They'll explain how much your monthly payment will be and go over any other conditions of the loan.

Once you know what the lender can do, you're almost ready to get started. There's just one detail left, and it's an important one. Sit down and look at the lender's numbers again. Pay particular attention to two of them: How much money will you need to get into a home? And how much will your total monthly payment be? Ask yourself if these two numbers work for you?

Sure, the bank will lend you that much. But you want to think about whether that obligation will require significant changes in your lifestyle. Will it leave enough for other things you might also consider important, such as family vacations, entertainment and savings? Are you comfortable looking at those numbers?

If the answer is yes, then let's get started looking for your perfect home. If not, then fiddle with the numbers until you get them to the point where you are comfortable, and that's where we'll begin our search. We'll still find you the perfect home.

Now if you had asked us instead where to find a great lender, that's one we can definitely answer and it's also easy. Give us a call and we'll be happy to recommend someone you can count on to be professional, responsive, diligent, competitive and completely reliable - we'll recommend the same lender we use, and we guarantee you'll be pleased.

Posted by
Mary & Dick

Mary & Dick Greenberg
New Paradigm Partners LLC
2601 S. Lemay Ave. #41
Fort Collins, CO 80525
970-689-4663
www.maryanddick.com

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Rainmaker
289,096
Fred Hernden
Tampa Bay area Home Inspector
Superior Home Inspections - Greater Tampa Bay Area

Dick, it used to bother me when I would be interested in buying anything that required financing and they would tell you "you can afford this". I just kept telling myself that I knew my budget and financial situation better than anybody else could possibly, so I would be the one that decided if I could afford it or not. I think that's what happened back in the housing boom when lenders were telling people they could afford those homes when actually they could not afford them... and they couldn't, thus the glut of foreclosures. Reality.

June 01, 2012 06:48 AM
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John McCormack
AlbuquerqueHomes.com
Albuquerque Homes Realty * www.AlbuquerqueHomes.com

Indeed pre-qualifying makes the world a much better place to live!  Hope you and Mary enjoy a productive day my friend.

June 01, 2012 07:01 AM
Rainmaker
972,337
Michael Jacobs
Pasadena Real Estate Representation 818.516.4393
Coldwell Banker Residential Brokerage

Hi Dick -- good point!  Just because a lender or mortgage broker tells a buyer he/she is approved for a mortgage of "X" --- who cares?  That's just the first step.  A buyer's comfort level with that amount and the payment is a crucial part of this equation.  

June 01, 2012 07:36 AM
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Debb Janes
REALTORĀ®, EcoBroker Camas, Washington
The Carl Group, LLC

And, I see time and time again, folks forget the cost of maintaining a home. You've got to have the budget to keep up with things - never compromise a lifestyle and peace of mind for a darned house, especially when there are so many affordable options.  ;)

Happy Friday.

June 01, 2012 09:15 AM
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Anna Banana Kruchten
Phoenix Real Estate Agent, CRB, CRS 602-380-4886
Phoenix Property Shoppe

Dick what buyers can afford is one thing and what they can manage comfortably and still have a life is another thing. Many times I tell buyers to 'pencil out' the real costs of home ownerhip to see what it will really be like. Great FAQ post for buyers!

June 01, 2012 09:31 AM
Rainmaker
1,002,453
Belinda Spillman
Your Real Estate Resource For Life!
Aspen Lane Real Estate LLC

Dick,  It is so important to get pre-qualified before starting that home search.  I don't even put them in the car until I know they are loan worthy.  No sense looking at homes they can't afford.

June 01, 2012 10:08 AM
Rainer
96,276
Chris Hardy
Northern Colorado Real Estate
Elevations Real Estate, LLC www.BuyFortCollinsHomes.com

Dick - What you're proposing is fiscal prudence and restraint based on solid analysis and advice from recognized experts.  That just seems un-American! [Snark added for emphasis]

June 01, 2012 10:19 AM
Rainmaker
585,852
Don Sabinske
Sabinske & Associates Inc.
Don Sabinske, Sabinske & Associates Inc.

Oh, yes.  The paying for it part.  The part that sometimes buyers don't want to face, but they must if they want my professional services.  Great post.  as usual.

June 01, 2012 01:00 PM
Rainmaker
1,310,230
Ron & Alexandra Seigel
Luxury Real Estate Marketing
ra@napaconsultants.com

Dick,

Very well written post, and I think you are giving great advice on this, and Debb made a good point about having reserves for managing the costs of maintaining a home...A

June 01, 2012 01:26 PM
Rainmaker
1,050,227
Scott Godzyk
One of Manchester NH's Leading Agents
Godzyk Real Estate Services

Good Evening Dick, very nice blog in your FAQ series. Itis important for buyers to know what to expect and to work with an experienced agent who can guide them through the buying process. I am a little late getting to read blogs tonight with such a busy day. Have a Great Friday

June 01, 2012 04:05 PM
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Dick Greenberg

Northern Colorado Residential Real Estate
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