Helpful Home Tips &
Mortgage Advice from Experts

House hunting is an exciting time. But before you can start shopping for a home, you need to decide how much you can afford to spend. With so many things to consider, this can be trickier than you think.

Here are a few things to keep in mind when deciding what to spend on your home:

First things first—get pre-qualified.
The first thing you should do is get get pre-qualified for a mortgage. NLC Loans makes this process easy and fast. When you’re pre-qualified for a mortgage, your lender will give you a general idea, based on your income and expenses, of how much house you can afford to finance.

Decide on a down payment.
How much you put down on your home will have an effect on how much you can spend as well. For example, if you’re pre-qualified for a $200,000 home but plan on putting $50,000 down, you can shop for homes up to $250,000.

On the other hand, if you’re putting less than 20%, you may have to pay private mortgage insurance (PMI). This can tack 1.75% of your purchase price to your monthly payment, which can end up being hundreds more a month.

Know your DTI.
Your DTI, or debt-to-income ratio, is the percentage of money that goes towards your debts each month. Financial experts recommend that your DTI, including your mortgage, shouldn’t exceed 40%.

Factor in home ownership costs.
Home ownership has a number of costs associated with it that you generally don’t have to deal with when renting, such as HOA fees, higher utility bills if you’re moving into a larger home, and general upkeep and repairs.

Don’t be “house poor.”
Buying at the top of your budget might mean that you won’t have room for other things you enjoy. Consider these factors when determining how much you can afford:

• Your lifestyle. If you enjoy regular vacations, eat out frequently, or like to treat yourself to monthly shopping sprees, factor that into your budget. Or, decide whether they’re worth giving up in order to spend more on a home.
• Your financial goals. Will buying at the top of your budget keep you from saving for goals like your kids’ college educations or your retirement?

Staying within a realistic budget allows you to enjoy the benefits of owning a home rather than stressing about how much house you can afford. If you’re ready to get pre-qualified, contact one of NLC Loans’ personal mortgage advisors toll-free today at 1-877-480-8050.