Your ability to purchase a home, or land, is contingent on your ability to pay for that property. It is wonderful if you are in the situation where you can pay cash but most people need to borrow money from some source.
To get a rough idea of what you can spend on property you can use any of the available online mortgage calculators. These take into account your annual income and the cost of the house. They do not look at your current, or previous, credit history.
Talking to a mortgage lender, either a bank or mortgage broker, will enable you to get preapproved. Preapproval is necessary in today's real estate market as it allows you to present an offer on a property as essentially a cash offer. The seller can feel comfortable that you will be able to get the financing and thus will be more interested in accepting your offer than one from some one who they aren't as sure of.
If you need to sell your current house in order to buy a new one you should estimate how much you will net from your current home and be ready to tell your lender. If you are buying a vacation property do you have equity in your home which can ge used for a down payment, or even the total purchase price?
If you are purchasing land, using equity in your home would allow you to deduct the mortgage payment on your taxes. You might also get more favorable terms with a home equity loan, or by refinancing your primary home, than you would on a land loan.
Almost all lenders will be reselling your new loan on what is called the secondary mortgage market. As a result of this there are some properties which they will not finance due to them not fitting the required guidelines. There are also specific requirements for particular types of loans. As you start to identify properties you should consult with your Buyer's agent as well as your lender as to whether the property will meet lending benchmarks.
