If you’re been quietly renting an apartment, squirreling away money for the day you’ll be buying a home, you know what it feels like to long for the day you’re a homeowner. Before you pack up your boxes or even start looking at homes, you need to know how much you can afford to spend on your home. Here are a few tips if you’re still saving up for buying a home:
• Get qualified. You’ll want to chat with a lender about becoming prequalified for a home loan. Although it’s nice to be “preapproved,” that really doesn’t mean a lot to sellers. Prequalification shows you exactly how much you can take out in loans, and can help you figure out about how much you can expect to pay each month.
• Decide what you want to spend. Of course, just because you can take out a certain amount doesn’t mean you should. Think about whether you want to take out the full amount you can borrow, or if you’d be content with a house that costs slightly less.
• Practice makes perfect. Before you start buying a home, start setting aside the difference between your current rent and your expected mortgage payment. Not only will you get used to the higher payments, you’ll also have a nest egg built up for home repairs or closing costs.
• Write it down. Before you go house shopping, sit down and make a list of the features your ideal home absolutely has to have, and those you would prefer but don’t need. Take this with you when you’re home shopping – you may be able to save some money by passing up features that don’t matter as much to you. Why get walk-in closets if your wardrobe can fit in a suitcase?
• Use a calculator. There are tons of online mortgage calculators that help you decide how much home you can afford. You should look at several and remember not to take them too seriously – after all, buying a home is a complex process.
When you’re trying to purchase your first home, it’s important to decide how much you can afford. Many new homeowners get in over their heads and don’t look at the big picture. Save yourself a lot of hassle and heartache by figuring out what you can afford – in advance.