Subtract this total from your take-home pay and you’ll know howmuch you can really spend on your new home each month. When calculating this figure use a mortgage calculator to research current interest rates. This will give you an estimate of what your mortgage payments will be. You may even realize that you genuinely cannot afford the home that you desire and that you need to work on reducing your monthly expenses or increasing your income before you even start looking. NOT GETTING A PRE-APPROVED HOME LOAN Some people are anxious to shop for a house and want to do it quickly, before they are financially able to afford it. If you have already started talking to sellers before having a hard talk with home loan lenders, you are making a mistake. It should come as no surprise, but not many sellers will want to work with you if you promise them a certain amount and then can’t fulfill that promise. Your assessment of what you think you can afford and the amount the bank is willing to lend you may not agree, especially if you have poor credit or unstable income. Ensure pre-approval for a loan before placing an offer. If you don’t, you’ll be wasting the seller’s time, the agent’s time, and your own time if you enter into a contract and then discover the bank won’t lend you what you need, or that it’s only willing to give you a mortgage that you can’t or won’t accept. DISREGARDING HIDDEN COSTS This is another commonmistake that many first-time homebuyers make. If you neglect to prepare for hidden fees, you might be in for a surprise. Closing costs are a good example of hidden fees, as they usually include several fees that cover final housekeeping matters. Once you’re
a homeowner, you’ll have additional expenses on top of your monthly payment. You’ll be responsible for paying property taxes, insuring your home against disasters, and making whatever repairs the house needs (which will occasionally include expensive items like a new roof or a new furnace).
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