[Knoxville Loans For First Time Buyers] Can You Afford What You’re Pre-Approved For?
The first step in any home buying adventure is to get pre-approved. A pre-approval lets you know how much you can afford and what loan types you can qualify for.
But, can you afford what you’re pre-approved for?
Most buyers will automatically assume the answer to this question is a resounding yes. And before you do the same, hear us out. There are many times where buyers can’t truly afford what they’re pre-approved for. In this post, we’ll explore why you can’t always afford what you’re pre-approved for and why it matters when you buy your first Knoxville home.
You’ll Be Paying For Other Items Not Accounted For
When you’re a homeowner, there is much more to pay than just your mortgage payment. Your mortgage payment will include taxes, insurance, principal, and interest. But, there may be other items that you’ll also have to pay on a monthly basis. Your job is to determine if those additional expenses will make it too hard for your to pay your monthly mortgage payment.
Here are a few items you may need to account for:
- Cost of trash pickup
- Homeowner’s association dues
- Rural metro
- Utilities (will it cost you way more to heat/cool the house?)
- Routine maintenance
These items are often overlooked by Knoxville first-time buyers. These items when added to your mortgage payment and other monthly bills could make it hard for you to afford your home. It’s your job to determine the cost of these items before you write an offer to determine whether or not you can truly afford all aspects of the home.
Just a wise word of advice, if you feel like it could make you financially stressed, it probably will. You’ll want to be able to decorate and enjoy your home, not feel like you’re barely making ends meet.
Your Income Will Be Changing
You may be able to afford the home with your current income. But, if you’re expecting your income to change in the coming months. You may want to reconsider how much you spend when you buy a home.
You may be anticipating starting your own business, going back to school, or staying home with kids. Regardless, if you expect a serious cut or change in your income, you don’t want to be locked into an expensive mortgage. You’re better off spending a bit less and having a payment that you can afford.
You’ve Got A Spending Habit
Finally, there are certain cases where buyers have a big spending habit. This doesn’t always mean that you have a mountain of debt. You could be paying cash every month on a major shoe habit or love to eat out every weekend. When this is the case, you could be approved for way more than fits your budget.
If you don’t plan on changing your spending habits after closing, you could find yourself in trouble if you plan on spending what you’re pre-approved for. You may like your expensive habit and don’t plan to change your ways. While there is nothing wrong with that, you’ll want to figure out your budget before going to buy a home.
For example, if you’re only used to paying $500 on rent and would be taking on a $1,200 mortgage payment, then you may be in for a rude awakening. When a major bill goes up that much, your spending habits will need to change.
Bottom Line: Fully Assess Your Situation
After you get pre-approved, consider how much your monthly payment would be and how that would affect your monthly budget. If that amount will be too much, consider spending less money a house.
Buying your first Knoxville home is an exciting and overwhelming experience. If you’re like most first-time buyers, you may not be sure where to start. If there is anything we can do to help you in your home search, please do not hesitate to contact us. We’ve helped countless homeowners buy their first home and we’d love to do the same for you. Rick can be reached at 865-696-9002 or via email at Rick@KnoxvilleHomeTeam.Com. Kati can be reached at 865-696-1888 or via email at Kati@KnoxvilleHomeTeam.Com.