What Do You Want Your Payment to Be?

Invariably when I get a call, and the first thing the customer tells me is that they are calling to see how much they qualify for, my immediate response is to ask them, “how much do you want your monthly payment to be?”

I ask this for a couple of reasons. Number one is that I want to know if they have done some budgeting analysis to determine what they believe their budget will allow them to pay each month. And number two, I’m curious to know if they are just “window shopping”, wanting to see if they can buy in the price range that they are looking. Sometimes the two go hand in hand, but many times they don’t. I will always explain to them how the qualifying works and ultimately let them know how much they can qualify to buy. But, I strongly encourage them to stay within the number they believe best fits their budget – even if they qualify for more.

I know that may go against the grain for what many lenders and Realtors may do. I get it – we are in a commission world, so the bigger the sale, the bigger the paycheck. So it would make sense to help them buy as much as they can qualify to buy. But I’ve found through experience that when we do what is really best for our clients, the result is better for everyone. They have a great home and a payment that fits comfortably in their budget – they are much happier than someone who is maxed out in his budget, resulting from buying too much home.

We’ve all heard the term ‘house poor’ and it is not a good place to be. I really believe that we should advise our customers, both from a lending perspective and a buying perspective, to consider the payment first. It isn’t fair for them to get excited about a home priced over what the ultimate payment will need to be to make their budget work. By helping them keep their budget manageable, they will be in a better place. And those customers are the ones that become lifetime clients, coming back to us again and again for their future home buying and selling needs – oh yeah, they also refer their friends!