Getting pre-qualified for your loan is the first step any buyer should take prior to hunting for a house. Yes we can go to open houses and dream, but the reality for the vast majority of us today is how much loan we can afford. Given the extremely tight lending standards, it is better to know this number up front. Remember from my post a couple days ago, Nearly 27% of All Home Mortgage Loan Applications Were Denied in 2010, is all the proof for doing one needs. Below is a good overview of what a buyer should consider when starting the home hunting process from C.A.R. Market Matters.
- When beginning the house hunt, some buyers go in blindly, not knowing how much house they can afford. Without this knowledge, buyers may find themselves viewing houses that aren’t within their budget. To prevent buyers from spending time viewing homes they may not be able to afford, real estate experts advise home buyers get pre-approved by lenders before house hunting. By providing copies of a recent credit report, W-2s, pay stubs, and bank and brokerage statements to a lender, buyers will have a better idea of the price range they can afford.
- Many financial and real estate advisors also recommend home buyers create long-term budgets to help create guidelines for affordable mortgage payments and long-term homeownership costs. Most experts advise clients to devote no more than 30 percent of their monthly household income toward housing costs, which should include mortgage principal, interest, taxes, and insurance. Numerous worksheets are available online to help consumers calculate how their income, debts, and expenses may affect the amount they can afford each month for the next 15 to 30 years.
Thank you for reading this post. If I can ever be of help in finding you the perfect property here in the Napa Valley, please email me at Curtis@NapaValleyAddress.com.
Your Napa Valley Broker Extraordinaire selling real estate here from its heart, Yountville.