Getting a mortgage pre-approval before shopping for houses is always a smart move. Apart from finding out the amount of loan you can borrow, this also prevents you from looking at homes beyond what you can comfortably afford.
You should know, however, that with a pre-approval, you’d know the maximum amount the lender is willing to let you borrow. If you’re preapproved for a loan that is larger than what you expect, don’t automatically assume that it’s fine to modify your budget and shop for homes up to that maximum limit.
Don’t Spend Too Much
While it’s nice to know that the lender is willing to let you borrow a bigger loan, it’s best that you don’t spend that much. Keep in mind that the figure you’re seeing is the absolute maximum you can borrow. There’s always the risk struggling to afford a bigger monthly payment if something unexpected happens in the future.
Shop Below the Limit
The best thing you can do, according to mortgage brokers from Altius Mortgage Group in Utah, is to work backwards or shop below that maximum amount. First, you should determine the monthly payment that works for your budget and find a loan that fits how much you can comfortably afford. Do take note that the size of your loan payment can affect your monthly budget as a whole. This includes necessities, utilities, payment for other debts, and leisure and entertainment.
Consider Your Other Plans
If your original budget is $250,000, but then lenders said you could afford a $400,000 house, you need to take a step back. Ask yourself if you can truly afford that much, while also considering about your plans in the future. Are you planning to purchase a new car, buy new furniture pieces, or have children? Don’t overextend yourself with loan payments, so you can still have money for other things.
When it comes to purchasing a home with a mortgage, shop below the top of your price range. You should consider your down payment, as this can greatly affect your monthly loan payment. Get in touch with a reliable mortgage broker or lender to find out more about your loan options.