The #1 question first time home buyers ask is: How much mortgage do I qualify for?
This is, by far, the wrong question to be asking. They shouldn’t be basing their purchase price based on what mortgage they qualify for but instead, how much of a mortgage payment are they comfortable with paying every month.
For instance, they may qualify for a $2000.00 per month mortgage payment but that doesn’t mean they should be buying a house with payments that high. Instead, they should be asking themselves what mortgage payment are they comfortable with paying every month so as not to be “House Poor”. I usually advise married borrowers to base their mortgage payment based on one borrowers’ income, in the event the other borrower becomes temporarily unemployed.
The current Fannie Mae mortgage underwriting guidelines allow a borrower to obtain a mortgage payment up to 50% of their gross income. Personally, I think that is crazy and here is why:
Assume you make $48,000.00 annually. That means the current guidelines will allow you to have a $2000.00 per month mortgage payment. So let’s run the numbers and see why a $2000 mortgage payment would not work. If you make $48,000 annually, that breaks down to $4000 per month and after a minimum of 20% income tax, you will take home $3200. So, use $3200 as your monthly bills starting point.
-$2000 – Mortgage
-$200 – Health Insurance
-$100 - Car Insurance
-$100 – Phone Bill
-$250 – Utilities (Power/Water/Sewer)
-$100 – Cable
-$200 – Auto Gas
$250 – left over for livable expenses (Savings, food, entertainment, etc.)
At $250 per month to live off of, you’ll own a big, beautiful home … that you can’t even afford to invite your friends over for the house warming party. Not my idea of a good time. Instead, go in to the home loan process with the idea of how much you want to pay per month. By doing this, you will be more effective in budgeting your money, thus being able to get a home you can afford to buy and comfortably enjoy living in.
The proper question to ask a mortgage company when thinking of buying a house is:
I would like my mortgage payment not to exceed “X” dollar amount per month. What price range of a home should I consider buying?
For First Time Home Buyers, choosing the right mortgage broker or lender to work with is the key in successful homeownership. Your Loan Officer needs to take into account your short term and long-term goals and help you choose a mortgage payment that you are comfortable with rather than getting a big loan that benefits them only.
I pride myself with the integrity and experience that allows me to help my borrowers obtain a mortgage that best fits their needs and not my pocket. Give me a call today and let me guide you through the proper home buying experience.
Experience, integrity and customer loyalty is how I’ve been serving Central Florida Homeowners since 2001. I help hundreds of homeowners every year by taking the time to look at their short and long-term goals. I help them customize a mortgage option that best fits their needs. As a consumer advocate and the Principal Broker at Florida Home Funding, my pledge to you is:
This is how I have maintained an “A+” rating with the Better Business Bureau and have some of the best online reviews. Don’t take my word for it, see for yourself.
Call me and let’s talk about to a mortgage that fits your lifestyle for you to comfortably enjoy for years to come…