Disclosure: This is a sponsored post. All opinions stated are genuine and my own.
If you're looking for a house, make sure you stay within the boundaries of what you can afford. It can be so tempting to look at houses 'just outside of your income zone' and convince yourself you'll be able to find a way to make it work. And that is all well and good, if you can, but what if you can't? Nothing ruins the exhiliration of owning a home faster than struggling to make the payments on it.
There are some things you can do to help.
1. Use a mortgage calculator. Be prepared before you even start to search. Plug in the numbers and see what you truly can afford. The best mortgage calculator will take into consideration not only things like your income and homeownership responsibilities (like taxes, insurance and potential HOA fees) but it will also consider things like your current debt-to-income ratio and how much money you are actually shelling out on expenses (like credit cards, student loans, etc.). A high quality mortgage calculator can also provide other information and facts you might not have considered when it comes to understanding where and how you are spending your money. When you have that clarity, you also have the ability to make changes that will help you be in a better position to buy.
2. Know before you go. This is closely related to number one, but a little different. It means have a clear number in mind for what you can afford to pay, and do not rely on just the amount you were approved for on a pre-approval letter. While it seems like you wouldn't receive an offer from a bank that you cannot truly afford, that is not always the case. What you may be approved for may not always be what is comfortable to pay. After you have used the mortgage calculator, and plugged in the relevant information, you will have a good idea of what your payments will be. Is it a number you can ease into without hesitation? Or is it giving you pause. If the hypothetical numbers are making you stop and think, they are probably too high. That is when you will need to readjust your thinking and aim for an amount that leaves you shaking your head up and down and saying, "Yes! I can afford that amount!
3. To Negotiate or Not to Negotiate? After you have determined the amount of money you can spend on a house that won't leave you reeling, do yourself a favor and do not look outside or just above that amount, unless you have supreme negotiating skills to help you get the price of the house down to where you need it. In today's market, that is not as easy to do as it once was... the demand for houses, among other factors, has caused the price of homes to rise exponentially and lowered the possibility for you to haggle or 'find a good deal.' Surely there are deals out there, but finding them is no longer an easy thing to do. Stay within your means.
4. Put yourself in the best position to buy. Pay off old debt, get your credit card amounts paid down and ensure monthly expenditures are only necessities. It is not the time to buy a new car, or get prepared for a new home by financing new furniture. Save those things for after you have settled into your new home (if you find at that time that you can afford them). Why? Because you will want your current financial record to prove you a solid candidate to the mortgage companies. They will be carfefully scrutinizing them to determine your financial health.
5. Shop around. If you have a pre-approved offer from someone and you feel you can get a better interest rate or deal, by all means, shop around. You want to be careful because too many credit checks against you are not favorable, but you also do not want to pigeon-hole yourself into a rate you could have beat with a little research. Likewise, while you may have found a home you love, there are a lot of houses out there. It might not hurt to continue the search a little longer. You could find a house you want just as much, for a better price. Buying a home is one of the biggest financial decisions you will make in your life, if not the biggest. It is important to be careful how you make it.
The process of buying an affordable home can seem overwhelming, but like anything else, there are ways to make it easier. Having the best information is key, so do your homework, consult people and agencies you trust, and go in with your eyes wide open. Keep your goal in mind to buy only a house you can afford, but to also do so at the best rate you can get. Your future self with thank you for your efforts.