One of the key elements in the home buying process is the buyer obtaining a mortgage pre-approval letter from a lender. Today, many prospective homebuyers go online to a website of a lender or real estate professional and use a "mortgage calculator" to tell them how much home they can purchase. The problem is that without knowing their credit score and performing a detailed analysis of their income, assets, work history and other factors, the results will be inaccurate.
Defenders of these calculators say that they give the buyer a "ballpark" estimate of how much home they can buy. In today's market, that ballpark estimate is just not good enough. Such estimates could be hundreds of dollars in error in calculating monthly mortgage payments, which could convert to thousands of dollars in error pertaining to the price of the home they can buy.
Does this mean that buyers should not use these calculators? Yes, that is exactly what it means. BEFORE the house hunting process begins, the buyer should meet with a lender and get that pre-approval.
