| When you’re frantically running around, looking at tons of different apartments for sale, the last thing you want to hear is that you can’t qualify for such a large mortgage. How do you make sure that you don’t waste your time looking for an apartment for sale that’s over your budget? Our suggestions below can help you focus on apartments that are within your range. Determine how much you can spend on a monthly payment
Before you even start looking for apartments for sale, make a budget. Collect all of your monthly bills and calculate the total. Include gas bills, phone bills, insurance, food, tuitions, etc. Once you’ve computed the total, subtract it from your monthly net household income (after taxes). That figure represents the maximum amount you can spend on all home ownership costs (includes property taxes, home insurance, etc.). Now, take that final amount and reduce it by 30%. That represents the highest monthly mortgage payment that you could afford. Here’s an example
You’re monthly bills (before adding a mortgage payment) add up to $8,000. Your monthly household net income is $12,000. Subtract your monthly expenses from your monthly net income ($12,000 - $8,000). That number ($4,000) represents the amount you can spend on total monthly home ownership costs (monthly mortgage, property taxes, home insurance, etc.). Finally, take the $4,000 and multiply it by .7 ($4,000 x .7), or $2,800. This number represents the maximum you can afford on your monthly mortgage payment. Get pre-approved
Now that you have an idea of how much you can afford on a monthly payment, try to get pre-approved (make sure to clean up any “shady” credit problems first). Shop around for the best rates, as even a half of percentage point can amount to a couple of hundred of dollars on a $400,000 mortgage. The pre-approval process is short – as little as 48 hours. Now, when you go searching for that perfect apartment for sale, you can tell the prospective owner that you’ve already been pre-approved for a mortgage. The owner will take you more seriously, and the whole process can go a lot faster and smoother than if you were not previously pre-approved. You might even be able to opt for a short 30-day escrow! |
