Tip #3: Get pre-approved for a home you can really afford
Finding out how much home you can afford before you hit the streets in your house hunting adventure will help you narrow down your choices and ensure that you find a home that fits your budget. Talking with a lender will help you determine this number range.

There is also an abundance of tools available online that can help you understand how much home you can afford. A basic rule of thumb to ensure that you can make your monthly payments while also handling all of your other basic bills like utilities, insurance, groceries, etc. is to take your salary and multiply it by 2.5. This will give you a good idea of the house that you can afford. For example, if your household makes a gross income of $100,000 per year, this rule would tell you that you can afford a home that costs $250,000. Get an even more accurate idea by using one of the many calculators available online. Some of these calculators will factor in how your income, debts and expenses affect what you can afford.

Getting pre-approved and pre-qualified are often confused – getting pre-qualified for a mortgage is based on a brief review of your finances, while getting pre-approved from a lender is based on your actual income, debt and credit history. You will be taken much more seriously as a buyer if you are pre-approved before you begin the looking for a home.

Getting pre-approved will also help set you up to win in a competitive home buying situation. If a home seller gets two similar offers and one offer is from a buyer that is pre-approved and ready to move forward with the purchase and the other is from a buyer that has no supporting documentation, the home seller will feel much more comfortable working with the pre-approved buyer.

Pre-Qualification vs. Pre-Approval, Which Do You Need?
Using Online Mortgage Calculators to Analyze Your Loan Possibilities

Get pre-qualified

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