Before you begin your home search. Before you contact a mortgage professional. Even before you attend your first open house, there’s something you need to do. You need to take inventory of your financial situation, both as it is now, and what it could be in the future.
Families grow. Employers (and jobs) come and go. Unexpected situations, such as medical issues, arise. What would your financial situation look like if any (or all) of these events occurred? Once you’ve purchased a home, will you still be able to save for a rainy day? It’s something to think about now.
While you’re thinking about the “what ifs,” you may want to consider a fixed-rate loan. If economic factors drive up rates and the cost of other goods and services, a fixed rate will help ensure that at least your monthly mortgage payment will remain constant.
The takeaway: Despite what real estate agents, loan officers, and well-meaning friends and relatives think you should do, bear in mind that whatever you conclude is a realistic monthly mortgage payment is the right amount for you. After all, it’s you – and only you – who must make that payment every month.
You need to start your home-buying journey knowing what works for you; once you make this decision, everything else will flow from it. Now you can find the right real estate agent, start your search, and confidently contact your mortgage professional to start the process.
Because now you know what you can afford.