Deciding How Much You Can Afford

Your lender decides how much you can borrow but you decide what you can afford.

Lenders are usually careful, but they make qualification decisions based on averages and formulas to determine the maximum they are willing to let you borrow. They realistically won’t know all the nuances of your lifestyle and spending patterns as well as you do. So, leave a little room for the unexpected – for all the new opportunities your home will give you to spend money, from furnishings, to landscaping, to repairs, yet alone for when the day comes that you need a new car or there is a family emergency, etc. Watch your budget carefully, tell your lender what payment you’re comfortable with and based on that number, they can tell you what price to set your maximum at.

Deciding how much you can afford should involve some careful attention to how your financial profile will change in the upcoming years. In the long run, your own peace of mind and security will matter most.