Understanding “Market Value”
Market value is based on what others have been prepared to pay for a similar property, under the same market conditions after reasonable marketing exposure. Market value is a fair price for both buyer and seller. It is what is called an “arms length” deal, and that means that there were no influences other than the market influencing the deal. You may of course pay more than established market value if your desire for the property warrants it. Conversely, you should not expect to pay less than established market value unless the property is being sold under duress.
Qualifying for your mortgage
Once you’ve made up your mind to buy a home, the first question that comes to mind is, “How much can I afford?” The financial aspects of buying a home do not need to be confusing. I can arrange to have you pre-qualified for a loan before you even start shopping. Most lending institutions will only allow approximately 30% of a person’s income to support a mortgage. They will usually not allow more than approximately 40% of income to support a mortgage together with other debts. The amount of money you qualify for, plus the amount of cash you can put down, will equal the amount you can afford to spend on a home.
The easiest way to determine your costs, and how much you can afford, is to use the mortgage calculator on this site – it allows you to change the amount of your payments, the amortization period, and the interest rates, so you can make your plans with the most accurate information.