Your Castle Real Estate has over 650 agents in Colorado. We help about 34 families a day buy or sell a home. Many families struggle to determine how much house they truly can afford. Most of the time, they are uncertain where to begin. If you are in the same boat, lucky you! We are going to help map out the process.
There are a lot of different variables that go into defining how much mortgage you can afford. To ease the stress of this process, reach out to a mortgage lender. Your Castle is an affiliate partner with Castle & Cooke Mortgage. Joe Massey is the Senior Loan Officer at Castle & Cooke. He works with individuals who want to buy a home, buy their first home, buy an investment property, and refinance.
When initially speaking with clients, Joe asks them a series of questions and evaluates their financials. This information allows him to determine how much mortgage someone can afford. Still, there is a lot that goes into a down payment. Joe will look at things like a person’s credit score. Do they have good credit? He will look into their debts. How much are they paying in student loans? Vehicle loans? Credit Cards? He will then calculate how much money someone currently has Are they getting a gift from a family member? Do they need government assistance? The more they know, the better they will understand what someone is looking for in a new property and how they can afford that property.
For example, they know they can afford a $2000/month payment. Joe will take this information and work backwards. He will figure out how the individual(s) can come up with the $2000/month payment, principal, interest, home owner’s insurance, and property taxes. Once he calculates this, it will equate to a certain number of potential homes to buy in their desired area. This maybe a $380K home or possibly it is a condo, so it is closer to $390K.
Everything we described, you can figure out on your own. However, doing it yourself would not give you a solid answer from a lender who will ultimately be lending you the money. Therefore, getting an opinion from a mortgage lender can make all the difference. All you have to do is spend about 30 minutes with them on the phone and they will let you know what you can truly afford when you go out to shop for homes.
When you do reach out to a lender, be prepared to answer some personal questions. How much money do you make? Where do you live? What is your social security number? What is your spouse’s social security number? Again, the answer to these questions will allow them to really understand what your goals are and what you are looking for in a new property. Once they get a good grip on these goals, they can help you with prequalification and a preapproval letter.
Is the Mortgage Lender Just Guessing?
At Castle & Cooke, it is critical for their team to give certain answers to their clients, not guesses. This is because many people will get prequalified or preapproved and then the horror stories begin. “Oh my gosh I got under contract and then got turned down.” This is something that should never happen. This is why mortgage lenders really focus on gathering information up front. This allows them to be able to hand you your preapproval letter and say, “Hey Mr. Client, you are good to buy this property. There are no additional questions that need to be asked.”
This will put you in a very strong position as a buyer. Especially now with the shortage of inventory in entry-level homes. If the seller has multiple offers for an entry-level home, the first thing the listing agent will evaluate is the financial strength of each buyer. They will ask: Have they talked to a creditable mortgage broker? Have the submitted their tax returns and credit reports?
If the answer is yes, they will know there is a high probability that the deal is going to close. This is how your offer will be seriously considered by the seller, giving you a strong competitive advantage in the market.