There are two schools of thought when considering you can afford for a mortgage.

One comes from the mortgage lender and is concrete and finite: you can afford a certain amount based on mortgage loan requirements.

The second answer is somewhat more flexible and depends on you, the prospective homebuyer. While a bank can tell you what you can afford based on the numbers and data they have available, they cannot account for personal budgetary requirements.

Therefore, without proper consideration, people could unintentionally end up financially over extending themselves.

One sensible step to take to avoid this is to create a personal budget based on what you know you spend as part of you mortgage prequalification pre-approval process. This way, you know which mortgage is right and realistic for you, rather than just knowing the best one you can afford on paper.

This knowledge will also help to narrow your criteria when it comes to looking for an actual house. This is better than approaching a mortgage lender and finding out what you qualify for and then adjusting your lifestyle to pay for it later, which could lead to unhappiness in the future.

Have questions about whether or not you can qualify for the mortgage you have been looking for? Contact one of our loan officers to find out for sure.

The price of houses had been rising steadily since January. However, this growth slowed to almost none in recent weeks. It has been predicted that prices will essentially stagnate until more jobs are created. Following this theory, mortgage rates should remain unchanged until the demand for housing (and therefore, the price) increases.

This isn’t the only school of thought on this though. As with any issue there are multiple viewpoints. Another one in this situation is that the demand for housing has been artificially high over the past few months. That is to say that the demand for housing has been higher than one would expect based on the overall condition of the economy, and this is because of the Worker, Homeownership, and Business Assistance Act of 2009, which provided tax incentives of up to $8000 for first time home buyers. That makes sense to me, $8000 for buying a home? Yes please! Therefore, when this act expires at the end of April, there will be a drop in demand for housing and a corresponding drop in mortgage rates.

But there is another side to this theory too! It is possible that a higher percentage of homeowners who locked in low rate mortgages could foster increased economic growth and stability and despite the end of the tax incentive, homes will continue to sell and therefore, prices and mortgage rates will rise.

This speculation is important as mortgage rates are subject to frequent, and often significant, change. In the past few weeks, rates have surged to their highest point in eight months as a result of the end of a federal program designed to reduce borrowing costs for consumers. If this is any indication of the way things are to be, then mortgage companies seem to be leaping at any opportunity to raise rates whenever possible.

As hard as it is to admit, the only certainty seems to be uncertainty. You just have to watch closely and try to take all the contributing factors into consideration. I certainly don’t know what the future of this industry holds, but hopefully, I’ve given you an idea of where to look so that you’re not totally shocked when whatever happens happens.