Country Minute: Pre-Qualification vs. Affordability
11/8/2022
By: Jessica MacDonald, Senior Financial Services Officer
House home

 

Searching for a new home or piece of recreational land can be exciting, but before you sign on the dotted line, it’s important to know that just because you qualify for a certain loan amount doesn’t necessarily mean it’s right for your budget. Here’s some advice to help you determine the loan amount that works for you. 

 

The Pre-Qualification Process

When our team works with the customer on a loan, we evaluate a borrower’s total income and any debt they have, the insurance they may have to pay on the new home and any property taxes they may take on before determining how much you could qualify for. This does not take into account every single bill you have to pay like your internet, cell phone, gas, or utility bill. That’s why it’s so important to know your own budget. 

 

Managing Your Budget

Figuring out if you can take on the monthly payment of a new loan is on you, the borrower, but there is plenty of support to help you make an informed decision about your finances. 

 

You can use online tools, or just do it the ol’ fashioned way: take a pad of paper and list all of your monthly bills out (and don’t forget things like gas expenses and groceries), and subtract them from your monthly income. After you see how much is left over, see how much more you can give each month towards a loan while saving enough for an emergency fund. With both pieces of financial information in mind, our team will work with you to adjust your loan from the pre-qualified amount if necessary to best fit your individual scenario. 

 

Ask For Help

Figuring out your budget and what you can actually afford can be tough. Before you accept a loan, talk to the financial service officer and discuss your questions and concerns! Our team of industry experts are happy to walk through your budget to help you figure out what the best option is for your situation. Remember, just because you qualify doesn’t mean you should spend that amount, you can always adjust your loan to a lower amount you feel most comfortable with.

 

When it comes to choose the right lender for your needs, consider these loan details outlined here in this article.

 

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