Mortgage News Biggest Buyer Mistake

by Kay
(Prairie Village, KS USA)

One of the biggest mistakes a home buyer can make is to buy more house than they can comfortably afford. Before you see a lender for preapproval, a must in today's market, know what payment you feel comfortable with. Don't get in over your head!

Remember, the real estate agent and loan officer make more money if you spend more money, and will often try to talk you into a larger mortgage. As a long time mortgage underwriter, I often see people buying homes at the maximum amount they can qualify for, and, although approvable at the higher loan amount, I often wondered how they could afford it if the furnace broke or some other expensive repair was needed.

When we bought our first home, the agent tried to get us to buy a home almost twice what we wanted to pay, telling us we should "suffer" for a few years, until our income raised to an amount that would make the mortgage payment comfortable. With today's economy, that is a dangerous attitude - you may really suffer if you suffer a job loss.

And, if you can still find them, do not try to qualify for a home you can't afford using a stated-income product. If you can't afford it on your "real" income, you will find yourself in foreclosure quickly if you overstate your income.

This is, in my opinion, one of the major causes of the high foreclosure rate right now. The lenders and agents got greedy and the borrowers were talked into buying homes they could not afford.

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Affording A Mortgage

Kay,

Thanks for your comments.

Home buyers, are you dreaming of a new home but waiting for a lender to say you can afford the mortgage payments? Here's a big secret...how much mortgage can you really afford?

Kate

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