Blog

When working with a homebuyer, I don’t start off by asking, “How much are you approved for buying?”  The better question is, “How much of a payment is comfortable for you?”  Typically, a homebuyer is pre-approved for an amount that is more than what they are willing to pay monthly. 

On a related note, the gap between the cost to rent and the cost to own has never been so large.  This has compelled a lot of renters to take advantage of the “cheap rent” we are seeing.  An unfortunate trend renters need to be aware of is that undervalued rent will catch up to market price; when the rent price starts going up, it will be after real estate prices have already boomed.

So, homebuyers, to test out how much you can afford, my advice is this:  Take an amount that you think you can handle for a monthly payment.  Put aside the difference between the rent and that mortgage payment.  If you find it hard to survive and can’t live without that extra disposable income, perhaps it’s not the right time for you to buy.  But if you are doing fine with that payment and can see yourself in a home of your own, congratulations!  You are ready to contact a broker about buying your first home and as a bonus using this exercise you even put away some cash for a down payment!