How Much Can I Afford?
Getting pre-approval for a loan is easy and takes just a few minutes over the telephone. Many people are pleasantly surprised to find out how much a lender is willing to lend.
Getting pre-approved for a loan should be the first step in your home search for several reasons. The most obvious reason is that knowing what you can afford can make a difference in the size, quality, and location of the home you end up purchasing. There is no sense in getting your hopes up for a home that you love but cannot afford.
And, even if you think you know which homes you can afford, you should still get this pre-approval for two other reasons. First, some sellers will not even allow their house to be shown to buyers who have not been approved. Second, most sellers require a pre-approval letter when you make an offer on the home you want to buy. Sellers don't want to risk taking their home off the market for someone who is not a serious and able buyer. So, getting this pre-approval letter upfront allows you to make an offer on a home as soon as you decide to buy it (instead of letting it sit on the market while you try to get pre-approved).
People often ask us who they can talk to in order to get pre-approved. We recommend the following three home mortgage consultants because we've had plenty of experience working with them. We don't get any kickbacks or other incentives for recommending them. And, we've actually used these consultants for our own financing.
Office phone: 843-414-2404
Cell phone: 843-813-0123
Email: leah.odom@gbmail.com
Website: www.leahodom.com
Leah Odom works for Carolina One Mortgage on James Island."I spent 13 years in telecommunications before deciding to enter the world of home finance. I find that my background in communications and customer service has helped me to achieve great success in assisting home owners to reach their goals. I have a passion for helping first-time home buyers. I'm always available to respond to clients’ questions, and I enjoy working with individuals who need to do some “homework” before they are ready to buy."
Office phone: 843-740-6540
Cell phone: 843-364-5626
Email: Joshua_feldman@countrywide.com
Website: Home.countrywide.com/joshuafeldman
Joshua Feldman works for Countrywide Home Loans in Mt. Pleasant."I am a native of Charleston, SC, and have been a part of the Mortgage Industry for the past 10 years! I am also a member of Countrywide's Circle of Excellence which recognizes the top 6% of Countrywide's Loan Consultants. I will always take time to assess your needs and help you choose the right loan for you."
Office phone: 843-720-4872
Cell phone: 843-343-5295
Email: stephen.perry@bankofamerica.com
Website: ae.bankofamerica.com/StephenPerry
Stephen Perry works for Bank of America in downtown Charleston."As a Bank of America Mortgage Loan Officer, I'll share my experience and expertise gained from over 5 years in the mortgage business. And, with Bank of America's wide range of mortgage choices, fair rates, and flexible terms and conditions, as well as our online tools, it should be easy to get where you really want to be - closing on your home. Make your move today and contact me so we can get started. I can't wait to work with you!"
Is there a way to get a ballpark idea of what price home you can afford?
Yes. The example below illustrates how debt can affect your buying power, but remember to consult an expert before beginning your home search. Let's assume that your family earns an annual income of $54,000 and that you've saved $15,000 towards the downpayment on a house.
Without Debt
Gross monthly income $4,500
Multiplied by 28% (max. monthly mortgage x 0.28
payment allowed by most lenders) _______
Total PITI (principal, interest, taxes, insurance) $1,260
With Debt
Gross monthly income $4,500
Multiplied by 36% (max. amount x .036
of all debt payments allowed) _______
Subtotal $1,620
Minus car loan and credit card payments - $640
Total PITI (principal, interest, taxes, insurance) $980
With no debt, you can qualify for a monthly PITI payment of $1,260, which translates to a loan of about $205,000 at current average rates. Combined with your $15,000 downpayment, you'll be able to afford a home priced at $220,000. However, if you add in a car payment plus several credit card balances, your buying power could drop by one-fourth or more. With this level of debt, you'll be looking at homes in the $175,000 range.
Does this mean you should put off buying a home while you make payments on the car loan and the credit cards?
Actually, it may be best to keep your home buying plans on track and use the house downpayment to eliminate those other debts. You might pay a slightly higher interest rate for a no-downpayment mortgage, but you'll also be able to lock in a home loan at today's favorable rates.
Most importantly, rely on the expertise of your real estate agent and lender before finalizing long-term plans. With their help, you can examine every option before the house hunt begins!
- Waterfront
- Condo
- New Construction
- Vacant Land
- Oceanfront
- Townhome
- The Keadle Group
- Carolina One Real Estate
- Lee's Cell: (843) 532-8615
- Katherine's Cell: (843) 478-0205
- Office: (843) 847-0239
- Email us at lkeadle@carolinaone.com