Should I use my max pre approval amount?

Hey Morgan! You don’t have to use your maximum pre-approval amount! Just because a lender approves you for a certain amount doesn’t mean you can comfortably afford the monthly payments. Consider your mortgage, property taxes, insurance, maintenance, and emergency savings before deciding on your budget. The goal is to buy a home you love without becoming house-poor. Call or text me, and I’ll help you explore homes that fit your budget and long-term goals! Diya Sarin | DRE 02095684 📞 818.799.7230 📧 [email protected] 🌐 diyasellsla.com IG: diyasellsla

You definitely don't have to spend your maximum pre-approval amount. Think of the pre-approval as the most a lender may be willing to lend you—not necessarily the amount you should spend. I always tell buyers to focus on the monthly payment they're comfortable with, not just the purchase price. Remember, your monthly housing costs can include the mortgage, property taxes, homeowners insurance, HOA dues, and possibly mortgage insurance. Before deciding on your price range, ask your lender to show you the estimated total monthly payment at a few different purchase prices. Then choose the amount that still leaves you comfortable paying your other expenses, saving money, and enjoying your life. You may qualify for a $900,000 home, for example, but if the payment on a $750,000 home feels much more comfortable, there's nothing wrong with staying at $750,000. My advice as a Realtor: don't buy based on what the bank says you can afford. Buy based on what you feel comfortable paying every month. A home should give you stability—not financial stress.

Hi Morgan, the caution above is warranted, and your own nervousness is actually good data. Let me give you a concrete way to decide instead of a feeling. The core problem: your lender approved a number based on your gross income and your debts. That formula does not know that you save for retirement, what your health insurance costs, whether you have kids or want them, or that you like to travel. The max pre-approval is the most they will lend you, not a recommendation. So flip the math. Start from the monthly payment that lets you live the life you actually live, and work backwards to a purchase price. Build the payment like this: - Principal and interest on the loan. - Property taxes. In California figure roughly 1.1% to 1.3% of the purchase price per year depending on local add-ons. - Homeowners insurance, which has risen sharply in much of California, so get a real quote early, not a guess. - HOA dues if any. - One percent of the home's value per year set aside for maintenance. Owners skip this line and then a water heater or roof reminds them. Then stress test it: would this payment still work if your household income dropped for six months? If the answer is no, you are at the wrong number. As a rule of thumb, buyers who land 10% to 20% under their max approval tend to stay happy homeowners. Buyers at 100% of max are the ones who feel trapped when life changes. And there is a bonus: shopping under your max gives you room to compete on terms when you find the right house, instead of being maxed out on day one. I am a real estate professional in Los Angeles and the South Bay, and for Sunnyvale I would be happy to connect you with a sharp local agent from my network. Zoltan

This is definitely a personal choice, but if you already feel uncomfortable spending your pre-approval amount, I think you have your answer. Best of luck with your purchase. Keith Jean-Pierre Managing Principal The Dapper Agents Operations In: NY, NJ, FL & CA

Not always. A lender gives you the max based on finances, but your comfort level matters. Focus on a payment that fits your lifestyle and long term plans, not just the top number on your letter.

Morgan, I would not recommend using your max pre-approval amount. Owning is such a wonderful experience, but there are times when it makes sense to rent. We have been in a lopsided market, but almost every market corrects and at some point we should see a correction cycle in the real estate market. I have a video on pro/cons of owning: https://youtu.be/GAoR3puVwBg?feature=shared I would be very cautious about maxing out financially. Tom

Is it good to max out your credit card because the money is available?? Ask yourself if you feel your employment is secure or you would be able to quickly get similar wages quickly if something unforeseen happened. Your Lender will let you borrow as much as you are "approved" for -- the questions is -- can you sleep at night comfortably with the payment. Rent is expensive and buying a home is expensive. There will be surprise expenses when owning verses renting -- make sure you have enough income or savings to be not caught off guard. Really thing about it and crunch your budget. Sometimes people have to borrow their max approval -- sometimes they do not. Can you be happy in a home with a lesser payment that is maybe not exactly what you want? Best wishes!