Finding the Right Mortgage Amount for Your Needs

September 13, 2022

Buying a home and getting a mortgage is one of the most exciting, stressful, and busy times of our lives. Between getting pre-approved, looking for properties, securing an agent, and planning logistics around packing, securing the actual mortgage can get lost in the shuffle. More specifically, securing the mortgage amount that you can afford can get lost in the shuffle. It’s not enough to look at the price tag on a home and decide it’s within your budget. Getting the right mortgage, one that you can afford, is about more than that!

Why a budget is so essential

The mortgage world and real estate market today are different than they were one year ago, and even six months ago. We have seen five rate hikes this year, blown up inflation, and a cooling housing market. All of these factors mean it’s important to have a clear budget in mind of what you can truly afford right now, because it might be a different answer than even three months ago. Failing to budget can lead to becoming house poor, meaning too much of your income has to go towards supporting housing expenses. Your budget will also be unique to you, based on your plans for the future. Maybe you want to start a family, buy a new vehicle, save for a vacation, or go back to school. Basically, any plans you have that involve money have to be part of your budget when you buy a home.

Questions to help find your budget

So how do you actually go about finding that perfect budget? Remember that buying a home is about more than the mortgage. You also need to consider your down payment, closing costs, and monthly utility bills. You can’t put all your money towards your mortgage without planning on how you will save for future expenses. So, ask yourself: 

What down payment amount do I want to contribute? What type of property is best for me? What location do I want to live in? What other expenses will I have to consider? What am I willing to sacrifice to be able to afford a mortgage? 

Being honest with yourself about these answers is the quickest way to figure out your ideal mortgage amount. However, deciding on a budget can feel overwhelming and daunting, which is why a broker is a handy person to have on the case as well.

What can a broker do?

There’s likely a difference between the mortgage you will technically qualify for, and the mortgage you can realistically afford. A broker can help you see that difference, and make sure you’re not falling on the wrong side. Plus, the best mortgage doesn’t just depend on interest rates! A broker will want to help you find a mortgage product with terms that work for you too. Sure, it’s nice to secure a low interest rate and make the lowest monthly payments you can, but the best mortgage product should also give you options for flexibility, perhaps prepayment privileges, and lender support. It’s tempting to fall into the mindset that the lowest rate is the best product, but a broker helps you understand why a mortgage is about much more than that

These kinds of conversations are some of the most important to have before applying for a mortgage. Knowing the mortgage amount you can truly afford puts you on track to finding the best product for your needs. As a broker, I love sitting down with clients to chat about their lifestyle and future plans to help them develop a personalized mortgage plan.

Need more help or information?

If you’re not sure where to start with the mortgage process, I invite you to get in touch. I’m committed to helping my clients find the right product in this market. I’m just a phone call or email away. You can book a call directly via my calendar below, or get in touch with me here.