Q–We have access to $30,000 for a home down payment. Is there any rule of thumb as to how large a mortgage we can get? I guess what I’m really asking is what price home can we afford?
A–Your question is often asked, but there is no simple answer. The maximum mortgage for which you can qualify depends on your down payment, income, credit rating and the mortgage interest rate.
For example, you can probably get a fixed-rate home loan at around 7 percent interest. But adjustable-rate mortgages at around 6 percent or less interest enable you to qualify for a larger mortgage amount so you can buy a more expensive home. However, you risk a rise in interest rates.
Before you start shopping for a home, get preapproved (not just prequalified) with a mortgage lender. Although mortgage brokers can arrange such a preapproval from a lender, please be aware mortgage brokers do not loan the money so they cannot issue the mortgage preapproval. It can only come from the actual lender.
After you know the maximum mortgage you can obtain, you can shop for a home in the right price range with the confidence that you can get the necessary mortgage.
Q–I recently bought a condominium that I like very much. At the tennis courts, I was chatting with a neighbor. She said she recently had a small theft from her condo. (She thinks it was the cleaning lady, but can’t prove it.) Is there any insurance available for this type of loss?
A–Yes. Every condo owner should purchase a condominium owner’s insurance policy. It is similar to a homeowner’s insurance policy, except it does not provide fire insurance coverage, since the condo structure is owned by the homeowners’ association. If your neighbor had a condo owner’s insurance policy, it would have paid for her theft loss (minus the deductible amount, of course).
