Get a Mortgage Pre-Approval
An important ingredient in a successful home search is knowing how much you can afford. You don’t want to fall in love with a property only to find out it’s outside your price range.
That’s why I recommend getting a Mortgage Pre-Approval. This is a document from your bank or other lender stating how much of a mortgage they are willing to give you. There are two advantages to getting this pre-approval:
- It gives you the peace-of-mind of knowing you can afford homes you view on the market, and won’t have problems arranging financing.
- It’s a sign to sellers that you are a serious, prepared buyer – which gives you the edge when making an offer.
You can arrange for a Mortgage Pre-Approval with your bank or other lender, or by working with a good mortgage broker.
How Much Home Can You Afford?
Banks and lenders use specific criteria to determine how much of a mortgage they’re willing to offer you. They look at your income, expenses, credit history and employment status, as well as the down payment you plan to make on a home. You can usually get a Mortgage Pre-Approval done quite quickly.
Generally speaking, if you are purchasing a property priced at $500,00 or less you will need a 5% down payment. For purchases ranging from $500,000 to $999,999 you will need 5% on the first $500,000 of the purchase price and 10% on the portion of the purchase price above $500,000. For purchases of $1,000,000 and above you will need 20% of the purchase price as a down payment.
Have questions about down payments or how to arrange financing? I would be happy to refer you to a mortgage expert. Please submit the form below or contact me directly.