Try to spend less than you’re approved for…
It’s kind of weird, but there’s a difference between how much a lender may approve you for, and how much you can truly afford.
Make sure to ask for and look at an estimate of your monthly/bi-weekly payments.
For instance, let’s say you’re approved for a purchase price of $300,000. At first, this sounds great. You figure the lender would only approve you for something you can afford. But if the monthly payments are $2000.00 and you are only comfortable spending $1500.00 per month, you shouldn’t buy a $300,000 house.
Sounds pretty simple, but too many people get pre-approved for an amount they probably shouldn’t be spending. And they spend as much as they are approved for figuring the lender wouldn’t have approved them for something they couldn’t afford.
Take into consideration the lifestyle you like to live. Do you like to go out to eat? Travel? Buy clothes? Some lenders don’t consider all this. They look at the big picture of your assets, debts, income, and credit rating, etc. On paper, you can afford what they approve you for, but it may mean living life differently than you want to.
Focus on the payments you are comfortable with, not the amount you’re approved to purchase for.
If possible, it’s a good idea to try and spend less than you’re approved for. This is safer, but not human nature. Many buyers end up spending as much as they get approved for.
As always, I’m here and ready to help you if you need anything. So feel free to reach out to me directly if and when you are ready to get started working together.
Hopefully this tip will help you, even if we don’t end up working together. (But, I pride myself on helping my clients, especially first-time buyers, to buy the best house they can for the least amount possible…so I hope we do end up working together.)
But before we go jumping to that stage…I want to send you some inside scoop most Realtors don’t share with people. I’ll send that along in the next series…stay tuned!