You should always start by talking to a lender If you do not know how much home / mortgage you can afford, you could be very disappointed when you find the home of your dreams, and the payments are not in your budget. Most experienced realtors will require this of you before they start showing you properties.
Not necessarily. In may make good financial sense to purchase a home with less than a 20% down payment - mortgage insurance provides that opportunity. Mortgage insurance is sometimes misunderstood, but it gives many people the chance to own a home sooner than later without a large down payment. Typically, the amount of time it takes for someone to save 20% down takes several years. In that time, they have been paying rent when they could have started building equity in their own home. Another downside is that in many areas, home prices are increasing. While waiting to purchase a home as you save towards a larger down payment, you’re not building equity in a home that you could own AND you could pay more for the same home. Considering a conventional loan with mortgage insurance or government-type financing (FHA, VA, USDA) may be the way to go.
Talking to a trusted lender is always the preferred method for figuring out how much you can afford. If you want a quick idea of how much you can afford on your mortgage every month consider this:
If you have any questions that were not answered by this blog, please feel free to give us a shout! We are always here to help our customers become educated and feel comfortable before they commit to a mortgage.