It is a good idea to get a mortgage pre approval by a financial institution prior to doing some serious house shopping. It is free and usually offers a 60 day interest rate guarantee from the date of the pre approval. However, it is important to understand that the dollar figure they present to you is not necessarily the amount you can truly afford. You don’t want to end up being “house poor” so I would recommend taking a serious look at your current financial situation and goals before deciding on how much to spend on your home. You want to take into account not only the mortgage payments, but also the utility costs, taxes, and so on. Make sure these expenses can fit into your budget.
As an example, when my husband and I went to a lender to get a mortgage pre approval, we were presented with a dollar figure that seemed quite high considering our current financial situation. During that time, if we had actually purchased a home for the amount we were pre approved for, we would have gotten into financial trouble. Instead, our goal was to spend at least $30,000.00 less and that is exactly what we did.
So, if you are considering buying a house, make sure to buy one that is within your budget so that you don’t become overwhelmed with financial stress. It’s just not worth it, and rather than regretting your home purchase, you can enjoy it, knowing that you made a financially sound decision. It is definitely wise to get pre approved, just be sure to take the figure with a grain of salt.