You might have finally made the decision to purchase your own home and you are in the process of thinking about what your budget can afford. Before shopping for a home, you need to set aside time to really think of what your budget is like in terms of mortgage payments.
To help you determine how much you can afford for mortgages, you have to consult a mortgage lender. Actually, the best first step to do is to work on the whole loan process until the step required to obtain a pre-qualification notice. This is what informs you and the seller of how much the lender is willing to put up for you.
After you get the loan in your hands, does that mean that is the price you can afford? This merits both a yes and a no. The pre-qualification letter is dependent on several things such as your income and your credit. This is not a picture of how your life looks like and this will lead you to problems if you look at it this way.
One of the worst things you can go through is purchasing a home and finding it hard to make the mortgage payments every month. This will happen if you solely depend on the pre-qualification letter you get or if you do not go through the entire process carefully. You probably got to buy your dream house but the payments have turned it into a living nightmare.
When thinking of what you can afford to pay when purchasing a home, you need to look at the overall picture of your finances. Are there future expenses which you expect to encounter? These could be having kids soon, sending a child to college or needing additional capital for your business. If you are an employee for a company, are you quite certain that their business is doing well or are you afraid of going through the retrenchments? If your family only has one breadwinner, what contingencies are in place in case the person is not capable of working for a couple of months due to a health problem?
These are the questions that you need to ask yourself before you go and get a mortgage. Everyone will be in a different situation so see to it that you carefully examine where you are to ensure that you are committing to something that you can easily afford in the long run.