Traditionally, homebuyers have found the
home they want before finding a
mortgage.
Still, some experts
suggest that a smarter approach is to investigate your chances
of qualifying for a mortgage first, by estimating what you can
afford.
The old rule of thumb is that you can afford
to borrow up to two and a half times your gross income. But you
also have to take into account current
interest rates
and the
cost of insuring your home and paying local property taxes.
You can get a sense of mortgage availability
and current interest rates by:
Watching
the ads in local newspapers and researching online
Contacting
HSH Associates, a New Jersey-based company that tracks
mortgage rates nationwide and will sell you a list
of lenders and rates in your area (www.hsh.com)
Prequalifying
for your mortgage
You can get an even more accurate
estimate of whether or not you’ll be approved
for a mortgage by getting prequalified. When you prequalify
for a loan, the lender tells you if you’ll qualify
for the mortgage and how much you can borrow. However,
the lender doesn't promise to offer you financing.
For that assurance, you need preapproval. In that case,
you apply for a loan before you find the home you want
to buy. But there is an application fee, so you probably
don’t want to initiate the process until you’re
really serious about buying.
As an intermediary step, you may
want to contact a couple of real estate brokers who
work in the area where you’re thinking of buying.
They have a sense of what housing costs and what the
local taxes are. And if they know what you earn and
how much you have available for a down payment, they
can give you a pretty clear sense of what your price
range is.
Dwight
P. Robinson, Senior Vice President, Corporate Relations,
Freddie Mac
Dwight
P. Robinson, Senior Vice President, Corporate Relations, 
