A lot of people dream about owning a New York City home. The reason behind this is quite clear – New York is one of the hubs of the world and there is no shortage of things to do in New York City. Owning a New York City home can be exciting and rewarding. If you are looking into New York real estate, you are not alone. However, before you get too serious in your search for NYC property, you should really take a moment to consider just how much you can afford. Living in New York City comes at a cost, and you should be aware of how much you will be spending if you decide to get serious about your search. This article will provide a framework in which to figure out just how much of a house you are able to afford.

The first thing you should do when getting serious about purchasing a new home is visit a lender. You should speak with a lender about getting pre-qualified so you will know just how much you have to work with. It is not uncommon for home buyers to be clueless about how big of a loan they can get approved for.

By getting pre-qualified you can eliminate the confusion and know precisely what the maximum loan you can take. By getting pre-qualified you are not agreeing to take a loan out from the lender. Rather, you are finding out what you qualify for, which does not create any obligation. Also keep in mind that there is a difference between pre-qualification and pre-approval. A pre-approval is a more detailed process in which a lender provides you with a letter stating you are able to receive a loan for a specific piece of property. If you already have a New York City home in mind, you may want to consider getting pre-approved, but you should speak with your real estate agent or real estate attorney about what best suits your specific needs.

When you go in to the lender, he or she will evaluate a number of factors in the pre-qualification process. First of all, the lender will look at your income. Generally speaking, those with higher incomes will qualify for higher loan amounts. However, income is not the only factor which a lender considers. Lenders also lend a lot of weight to how much existing debt you have and what your other financial obligations are. Lenders generally use a debt-to-income ratio when determining whether to qualify you. This ration typically falls somewhere between .28:1 and .38:1. This means that lenders are hesitant to pre-qualify borrowers who have more than 38 dollars of debt for every 100 dollars they earn.

If you happen to have a high debt to income ratio, lenders are more willing to authorize a loan if you are able to make a larger down payment. So if you have cash on hand, it might be wise to make a larger down payment if pre-qualification is an issue.

A New York City home is a great investment. If you are in the market for New York property, you should consider getting pre-qualified for a loan to speed up the process.