Kathy Foran - REALTY EXECUTIVES Boston West



Posted by Kathy Foran on 4/16/2017

When you get pre-approved for a mortgage, you may be excited to find out that you can afford a lot more house than you thought you could. Donít be so fast, this is just what you can get a loan for. The bank doesnít know a lot of factors about your finances. While you most likely had to provide a ton of income verification statements and information in order to get this ballpark figure, relying solely on the pre-approval number can put you in a bind when it comes to your finances. Your lender doesnít know certain things like how much you spend on groceries or how much your cell phone bill is each month. 


What Lenders Consider


Lenders look at the health of your credit history, how much income you have and how much debt you have. These are the big factors that tell your lender about how much house you can afford. Yet, your home lender is not your financial advisor and canít help you with household expenses and the like. When thinking about what price range of home you really can afford, consider these factors beyond the bank:


Your Monthly Budget


Your spending habits will ultimately affect your ability to pay the monthly mortgage bill. If youíre spending all of your disposable income, then you may not be able to afford much at all beyond what youíre already paying for rent. You donít want to stretch your finances so thin that you wonít be able to afford food! 


Owning A Home Requires Additional Costs


Lenders do factor into their number the cost of homeownerís insurance and property taxes, but donít consider other things like utility bills, trash pickup and home repairs. All this can certainly add up when youíre a homeowner! 


Your Savings Is Nonexistent


If youíre unable to save any money at all if youíre a homeowner, then youíll be in trouble. You need money stashed away in case of unemployment or an emergency. You also may be planning for things like retirement and future costs like childrenís education. For the initial purchase of a home, youíll need upfront payments available for the down payment and closing costs. However, youíll need some more savings beyond that for everything that life brings your way!  


You Have Big Plans


Are you thinking of quitting your job and heading out to start your own business? Now may not be the best time to buy a new house. These changes could have a huge impact on your finances and leave you unable to pay your mortgage. Your lender wonít be asking about these plans, so youíll need to know what the future holds (for the most part ) in order to keep your own finances secure. 


The bottom line is that anything that could leave you financially stressed is not a good idea. Considering that buying a home is one of the biggest purchases you'll ever make, you want to be sure that you keep your finances in check during the purchase process.  




Tags: mortgage   budgeting   loans  
Categories: Uncategorized