Did you know that the details of a property can affect how much you can afford?
Let’s say you’re looking at two homes that are both listed at $500,000. You might think that you could afford either of them equally since they’re the same price, but you may be wrong. You may actually qualify for a mortgage on one of them but not on the other. There are a few unexpected things that can greatly affect whether that pre-approval actually applies to the property you’re looking at. These include:
- The type of property (condo, single-family home, etc.)
- How you’ll be using the property (primary residence, investment property, vacation home)
- The market the home is in (whether the local real estate market is highly competitive or not)
- Additional fees such as property tax, HOA, maintenance expenses and more
Let’s discuss these factors in a little bit more detail to ensure you stay informed throughout the house-shopping and mortgage processes. Buying a home should be a great experience, and unexpected costs are the worst – so we’re here to help!
How Property Type Affects Your Mortgage
In many cases, a single-family home is easier to qualify for than a condo or townhouse. That’s because condos and townhouses often have HOA fees and higher interest rates. Lenders need to factor these costs into a mortgage.
A primary residence is usually easier to qualify for than a second home or an investment property. As it’s generally a lower risk to the lender, the mortgage costs will be lower for your main home – so keep this in mind if you’re buying a home that won’t be your primary residence.
Are you looking at homes in a very competitive market? If so, you may get pushed out of your price range due to a bidding war. If you decide to keep on bidding, you may have trouble qualifying for a loan for the higher amount, especially if you’re getting into jumbo loan territory.
And finally, there are several additional costs that can affect whether you can qualify for a mortgage on any given property. This includes property tax – which can be higher or lower depending on the area – HOA fees, utility expenses, and maintenance expenses. For example, a home with high HOA fees may be harder to qualify for, and a house with a lot of maintenance requirements might end up being outside of your budget in the long run.
Qualifying for a Mortgage on the Property You Want
At Loan Cabin, we’re here to help you qualify for a mortgage on your dream home. Get in touch with us today if you’re ready to get started!