WHAT CAN I AFFORD?
If you are paying 100% cash, what you can afford is clear. However, if you are obtaining a mortgage, you will want to speak with a lender sooner rather than later.
It is important to understand all the costs involved and make sure there are no surprises in your credit.
Here is what we recommend!
Interview mortgage brokers (yes, we recommend meeting with more than one). They want your business and you may be able to get the best of what each one may be offering.
Select a loan type. Your lender will be able to provide the best guidance as to which loan type is most suitable as there are many! They will also review how various down payment amounts can best support you in getting the best terms.
What is cash-to-close? In addition to your down payment, there will be cash needed for closing costs and pre-payments (insurance, taxes, etc.). It is critical you understand the amount needed so you can budget accordingly.
Get a written pre-approval letter. This is not the same as an actual mortgage but it does show the seller you are as serious about buying their home as they are about selling it. This is a critical step which should not be overlooked, especially if homes are moving quickly in your desired market. Most sellers will not seriously entertain an offer without this.
Do what your lender tells you. Once pre-approved, it is critical that your follow your lenders instructions. This could be everything from keeping spending to a minimum to suggestions not to pay down your debt. Do not take this last step lightly.