Getting preapproved for a loan before starting the home buying process is very important for two reasons.
The first is so that you can confirm to the seller that you are able to buy. The second is so that you know how much you qualify for. That is where things get a little tricky.
Often when a buyer finds out the loan amount they qualify for they are shocked, especially when they find out the monthly payment. In their minds, the buyer thinks there is no way that I could afford that! And they are right.
You see, a loan officer uses your gross income to qualify you for a loan not your net income. I don’t know why it is called gross but I think that it is because it is grossly disgusting to think about how much of your income you don’t get to keep! And your loan officer doesn’t look at your entire monthly budget either. They aren’t factoring in groceries, utility bills, childcare, going out to eat or date nights, your clothing budget (higher for some than others) or any kind of tithe or giving. So what happens to you as a buyer if you don’t factor these things in for yourself? You can get in trouble.
You know what you can afford in your monthly budget better than anyone else, including your loan officer. If you just look at the amount you qualify for and not what you can afford in monthly payments, you will end up living in your nightmare house not your dream house.
Why? You will be stressed. You will wonder what you are going to do if an unexpected bill comes. You will miss the family memories that come from going to the zoo together or date nights with your spouse because all of these things will be “extra” in your budget with a house you can’t afford and so you can’t do anymore. Your dreams will go from “I want to take a vacation to Florida” to “I don’t know how I am going to pay for the windows this house needs.” And until there is a drastic increase in your income you will always feel this way.
I think that we all get so caught up in the perfect home that we forget the bare bones basic purpose of a home. With all else stripped away the purpose of a home is to keep you dry and warm and safe and a place to make memories.
Over time, the house will become outdated and nine times out of 10 when you are gone, your kids will have no attachment to it and sell it. So make sure that you don’t bite off more than you can chew in a house payment because at the end of the day, the purpose of a home isn’t about having the biggest and the best. By sticking to a payment that you know you can afford, you will be able to avoid stress and enjoy living in your home.
Esta Ryder, Broker/Owner
Ryder Realty, LLC