How to Instantly Know Your True Home Buying Budget (Without Guesswork)

Congrats! You've started on your path to home ownership, this is such an exciting milestone. 

First up, understanding how much house you can truly afford is crucial to ensure peace of mind and financial stability. Let's dive into the steps to determine your home buying budget accurately.

Step 1. Utilize an Online Affordability Calculators

Several reputable financial institutions offer online tools to help estimate how much house you can afford based on your income, debts, and down payment.

• My Personal One: Mortgage Calculator
• NerdWallet's Home Affordability Calculator: NerdWallet: Finance smarter
• Zillow's Affordability Calculator: Zillow

These calculators provide a personalized estimate, helping you set realistic expectations and narrow down your home search.

2. Consider Additional Homeownership Costs

Beyond the mortgage payment, homeownership includes several recurring expenses:

• Property Taxes: Vary by location; check local tax rates.  Here's some links to help you find your taxes: Chelan Co. Douglas Co
• Or if easier - shoot me a message and I can find it for you  
• Homeowners Insurance: Protects against damages; premiums depend on location and property value.
  
  
• Private Mortgage Insurance (PMI): Required if your down payment is less than 20%.
  
  
• Maintenance and Repairs: Budget 1% of the home's value annually for upkeep.
  
  
• Utilities and HOA Fees: Monthly costs for services and community maintenance.
  
  

Being aware of these costs ensures you're financially prepared for all aspects of homeownership, and add these into your calculator to ensure accurate results.

3. The biggest Step: Get Pre-Approved for a Mortgage

Obtaining a mortgage pre-approval gives you a clear picture of what lenders are willing to offer, strengthening your position when making an offer on a home.

Steps to Pre-Approval:

1. Find a trusted & comptenet lender (I know many, message me for their info) 
2. Setup a meeting / time to interview your lender. There are many lenders so ensure you're comfortable with the one you pick.
3. Gather Financial Documents: Pay stubs, tax returns, bank statements.
4. Submit Application: Provide necessary documentation, as directed by your lender.
5. Receive Pre-Approval Letter: Indicates the loan amount you're qualified for.
   
   

A pre-approval not only clarifies your budget but also demonstrates to sellers that you're a serious buyer, and highly strengthens your offer.

Determining your home buying budget involves a comprehensive evaluation of your financial situation, including income, debts, and additional homeownership costs. Utilizing online tools and obtaining a mortgage pre-approval can provide clarity and confidence as you embark on your home buying journey.

Lastly, while your mortgage pre-approval indicates the maximum amount a lender is willing to offer, it's usually best to purchase a home below this limit to ensure financial flexibility and avoid being "house poor".