If you are looking to purchase real estate in Colorado Springs make sure and qualify with a good and reputable lender. If the pre-qualification you receive is based on your gross income (before taxes), you may want to re-think how much you can afford to buy. Your net income after taxes is significantly different so I encourage buyers to look at what they instead of gross when deciding how much to spend on their new home. Mortgage calculators are useful tools but homebuyers need to take into account other expenses and debts as well.
Do you have a budget? If not, you had better create one! It does not take long and will give you a clear idea of where your money goes every month. Subtracting all of your debts every month (car payments, credit cards, school loans, etc…) from the amount you earn after taxes will provide you with a more accurate picture of how much house you can really afford.
It is recommended that your monthly mortgage amount should not exceed 28% of your gross monthly income. If you have other monthly payments, it is suggested that your monthly income less your total debts each month does not exceed 36% of your gross monthly income. Be wise, don’t get into the situation where you pay your mortgage each month and then charge all of your other expenses on credit cards. Before you know it, you will be in over your head in thousands of dollars of credit card debt.
Many people have bought homes that exceed 50% of their monthly income and are now foreclosing because they cannot make their mortgage payments. They should have never been approved for the loan in the first place! If you have further questions about pre-qualifying for a mortgage, I can refer you to a reputable lender in Colorado Springs for more information. You may also refer to my homebuyer timeline for more information on getting pre-qualified for a home.
Pre-qualification vs. Pre-approval