If you were headed out to buy a car today, you would likely have a budget in mind.  Impulse shopping aside – usually when we are looking to make a purchase, we know our limits.  Even clothing shopping – we have our go to stores, sections and sales.  There are certain stores we save for special “splurge” occasions.

When it comes to home shopping, one should follow the same mentality but many don’t.  It’s pretty common for potential buyers to begin their housing search by online – checking out homes via Zillow or Redfin that meet their criteria in terms of bedrooms and bathrooms, neighborhoods and schools.  There is a more important set of criteria of course, that runs along the lines of debt-to-income ratios and less along zoning lines.

I recently ran a poll on Instagram to see who my friends would call first if they were thinking about buying – their favorite realtor, or their trusted mortgage advisor.  It was pretty split…

Consider it this way: One day you are thinking, “hhmm I wonder if I could afford to buy” or “Can I afford a bigger and better home?”  So you text your lender.  She (because it’s me) updates your credit, qualifies your income and says, “Hey!  Yes, you can! This is the price range you should shop in. Here is what monthly payments will look like…”

So you call your realtor and tell him/her you’re pre-approved for “x” amount and want to see some homes in that price range that meet your wish list.  You get some emails of listings, set up a day to shop and every single home you walk into – you can actually afford!  You find one that checks the boxes, make an offer and boom – you’re in escrow.  Everything goes so smoothly and you end up with a house and a payment that you just love.

In an alternate scenario, and it happens all too often in this manner, you are sitting on your couch and wonder “hmmm could I buy?” So you jump on Zillow and start looking at homes in your ideal neighborhood.  The payments on the side bar look reasonable enough so you call your realtor.  The next morning you go see a couple and fall madly in love with one.  Your realtor refers you to a lender.  You call and it looks a bit tight to get you to qualify for that price point.  Those payments on Zillow didn’t include taxes, insurance, HOA fees and mortgage insurance.  Whoops.  Doesn’t matter though –  no is not an option at this point – you need this house.  You moved in in your mind yesterday. Whatever has to be done, must be done.

You call your closest relative, you scramble to pay down some debts, you over-leverage yourself in a couple ways but after a very hectic 30 days – it all works out.  You get your home but the only problem is the monthly payment isn’t so comfortable.  You start to love the house a little less until one day when the heater goes out and you don’t have an emergency savings because you used every dime you had and didn’t have to qualify… and you think – shoot, I should have gotten pre-approved first and shopped for something more manageable.