Recently I received a call asking if I advise my clients on their budget and if I would consider myself a budgeter? Interesting question and one that took me by surprise. I am a lender, I advise and educate people on deciding what loan options are best for them. I discuss what their budget is in the sense that I am assuming that if they are calling me for a home loan they already know what their monthly budget is for a mortgage payment or at least have a good idea of what they need their monthly payment to be.
Normally a first time home buyer is not fully aware with the costs involved in obtaining a mortgage and what may be included in their mortgage payment. Those additional expenses; possibly mortgage insurance & escrows (taxes & insurance). But in advising clients on their mortgage and what might best suit their needs, I do not set their budget.
I do not claim to be a financial advisor nor a budgeter, but if you are talking to a lender you definitely want to know that they are financially savvy. They should be able to help determine the best loan options for your specific needs and situation. Not everything is about rate, its about knowing your limits and not stretching your budget too far.
I always advise my clients that you don’t want to be “house poor”, which means you don’t want all your available money to be going to just your mortgage. You want some breathing room, for saving, entertaining, vacations, etc. With home ownership brings other expenses that you need to be prepared for such as repairs, furniture, decorating, painting, etc. Make sure to check out “Are you prepared for home ownership”.
My best advice is “know your limits”, don’t try to push too close to the edge. Talk with a lender that is looking out for your best interest and wants what is best for your budget.
If your a first time home buyer make sure to check out the MCC!!!