I'm thinking about buying property...how much can I afford?

Trap#1
"You qualify for a $300,000 house: Go for it!"

Before you even go to a loan calculator, sit down with your family and consider your monthly budget and how much you WANT to spend on a house payment. Your "payment" includes the principal and interest on a property PLUS monthly costs for insurance and taxes and maintenance. Throw in an estimate for utilities and $100/mo for things you haven't thought of. That is the number you want to start with. Then see where that number fits in with all of your other monthly expenses like food, fun, interest payments, vacations, big ticket gotta-haves, & more food & fun. Then make sure you've got reserves set aside in case someone in the family loses a job. There's your number.

Let's say you decide that about $1,500/mo is your comfortable monthly payment. Play with the loan calculators on line and find out how much house that will buy, and if you could be pre qualified for that amount. Then take that number to your first interview session with a buyer agent.

Trap#2
"Go on the internet and get pre-qualified for a loan"

There are many free loan calculators out there, so use the ones where you don't have to supply any real personal information. Most web privacy policies allow a great deal of discretion for the web site owner to share your information with other sources. It is hard to see in all the legal-ease. My personal experience was that the loan deals offered on the internet often had hidden costs and my written package included different numbers than what I thought I had calculated on line. Get a rough IDEA of what you qualify for, and then get the advise of your chosen buyer agent for who to contact for the real stuff. I found that my local lender (whom I could see eyeball to eyeball) had better rates and more information than I could get on line. Of course this is after I had EDUCATED myself on line and knew what kinds of questions to ask.

Trap#3
Ad that says: "Lowest rates available anywhere! Only $678.00/mo. for a $300,000 house!"

You know the old adage, "if it looks to good to be true, it probably is." There are hundreds of ways to configure a loan, based on loan type, duration, whether "points" are thrown in, if there are "ARMS" or have "balloon payments" etc. Don't be fooled by the low monthly dollar amounts offered. That's only a fraction of the whole picture. A good buyer agent can listen to your whole financial situation, past—present—future, and make a loan recommendation. Test that suggestion against what you've learned on line, and be in charge of the final decision.