by | April 06, 2023
Buying a home is an exciting milestone, and yet it can also be an emotional time and, of course, expensive. All the questions, searches, decisions and document-drafting can make it feel overwhelming — but it doesn’t have to be.
Along with having experienced experts in your corner (like a real estate agent and lender), you can turn to the internet for added support. These online tools offer insights and calculations that can streamline your home buying process.
A home affordability calculator gives an estimate of how much you can afford to spend on a home, taking into account some or all of these factors:
Having an accurate home price estimate is important to help set the right expectations for your search, says Zachary Rose, a Citi home lending officer in Laguna Niguel, CA. “You don’t want to be looking at houses that are $800,000 or $900,000 when, at the end of the day, all you can qualify for is $700,000 or $750,000,” he says, and using a home affordability calculator is an easy way to tailor your search to your budget.
Once you’ve determined the maximum price within your budget, you’ll want to think about the right type of loan. Considering how much you’re comfortable paying each month is part of that and, often, “the payment you can qualify for and the payment you feel comfortable making are two different things,” says Rose.
Entering your desired monthly mortgage into a loan amount calculator gives you an estimate of how much you could borrow in either a 30-year or 15-year, fixed-rate loan. By playing around with different numbers, says Rose, you’ll be able to arrive at the total monthly cost that suits your budget best.
This tool estimates how much you can expect to pay each month based on the total amount you plan to borrow.
By factoring in your loan amount, interest rate and loan term, a monthly mortgage payment calculator can ensure your new housing payment fits comfortably into your budget, especially when you get specific.
“It's very important to include as much information as possible,” says Gonzalo Maturana, Goizueta Foundation term associate professor of finance at Emory University in Atlanta. “Do your best to include estimates for property taxes and homeowners insurance, as well as homeowners association fees and private mortgage insurance.”
These factors are important because they can increase the monthly payment significantly, says Maturana, and the more information you can give the calculator, the less likely you are to be taken by surprise when you talk to a loan officer.
QuoteThe payment you can qualify for and the payment you feel comfortable making are two different thingsEnd Quote
Once you’ve talked to a loan officer and have a mortgage pre-approval in hand, connecting with an experienced real estate agent is key. You’ll want one who has local market knowledge and the ability to put together a strong offer.
Your best approach is to interview multiple agents and ask lots of questions, says Maturana, and signing up with a private real estate agent network like Home Captain can connect you with top agents in your area. (Borrowers who are pre-approved by Citi receive access to the service for free.)
“Inquire about their track record, including how many recent transactions they’ve closed,” he suggests, keeping in mind that, according to a report from the National Association of Realtors(NAR), the typical agent closed 12 transactions in 2021. “Then, try to assess whether they seem knowledgeable about the neighborhoods where you’re looking to buy. A good agent will meet both criteria.”
When you’re ready to submit an offer on a home, a home value estimator is useful for getting a sense of how much the home is worth in the current market. The tool uses recent sales data to provide an estimate of a property’s fair market value. As a buyer, you can use this information to help you determine what to offer as a purchase price.
It’s worth noting these estimates are based on the sales data provided, so they’re likely to be more accurate in areas where there are frequent transactions and less so in areas with low turnover rates, says Maturana. You can bolster this by requesting a comparative market analysis (CMA) from Home Captain, which will be emailed to you in minutes, or from your real estate agent. Pairing these two sets of information will provide you with the clearest picture of what to offer.
The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.
Citi mortgage lending services and real estate agent/broker services are independently provided, and this advertisement should not be considered an endorsement of each other’s services. Services not available or may be limited in select states. There is no charge for the agent matching service, however, standard real estate agent/broker commission charges may apply.
