Top 3 Factors in Affording a Home

Seems obvious but many buyers start the process of looking for a home not knowing what price they can afford.  First thing a buyer should do is get pre-approved for a mortgage.  If you don’t have a bank that you are currently working with talk to your CMK agent and we can help you get pre-approved.  Once you are pre-approved then we know what your payment can be and what price range you should be looking it.  This will help us, your Realtor, and you have reasonable expectations as to what you can look at.  Size, location, amenities, age etc. all can change the value greatly.  We need to make sure your price range is reasonable for what you want to look at.

This one is not as obvious as the first.  The rate at which you are charged for the money you borrowed can greatly affect your monthly payment.  For if you borrowed $150,000 at 5% for 30 years your payment would be $4805.23.  If everything stays the same but the interest rate goes to 6% the payment is now $899.32.  That is an extra $94 a month!  As interest rates go up your price that you can afford to pay goes down.  If you could only afford $805.23 a month and the interest rate was 6 and not 5 now the loan amount can only be $134,305.  Your purchasing power just dropped by over $15,000 and all that changed was the interest rate.  This is the very reason that you hear many financial advisers say that now is the time to buy. Interest rates are at historic lows and simply put allow the buyer to purchase more.