3 Tips to Determining Your Real Estate Price Limits

Establishing your real estate price limits is an important part of the buying process. Before you get too far involved, you need to sit down and determine a definite limit to your purchase. Nothing can be more crippling financially than getting in over your head with a mortgage. It can cost you your credit, your financial future, and make things much more difficult on you. Here are a few tips to help you determine your real estate price limits.

1. Look at Your Budget

The first part of the process is to determine exactly how much you can spend. This is the most important part of the process as it allows you to stay within your limits. You need to look at your monthly bills and come up with an estimate of what you can spend on housing. This will help you figure out how much house you can buy and what type of mortgage you need to get. 

2. Mortgage Calculator

Once you determine exactly how much you can afford, the next step is to see how much a house will cost. There are a number of different mortgage calculators that you can use online to obtain this information. Just pull up a mortgage calculator and input some values. It will usually allow you to input a mortgage value, a down payment, and an interest rate. It will then calculate the mortgage payment for you and tell you how much it will cost per month. While this is not a completely accurate estimate with all of the potential costs, it will give you an idea. 

3. Get Preapproved

Another great way to help you accurately set a real estate price limit is to get pre-approved by your mortgage lender. This will give you a completely accurate estimate of what to expect when you buy a house. Whether you think you can afford a house or not is completely irrelevant. Your lender will play a huge role in determining how much house you can buy. If you think that you can afford a $250,000 house based on your estimates, the bank might only approve you for $200,000 based on theirs. Therefore, it is essential that you talk to a loan officer before you start shopping around. This way, you know exactly what you can afford and there are no surprises later.

By taking this approach, the loan officer can get you a much more accurate estimate of what to expect. They will be able to figure your exact mortgage payment with the interest rate that they can offer you. This is important as it factors in your credit, income, and several other factors. They can also tell you exactly how much your private mortgage insurance premium will be each month, which adds on to the monthly mortgage payment. Sitting down with a mortgage specialist will allow you to customize a payment estimate. This will give you the most accurate cost estimate and determine your real estate price limits. 

 

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