Do you know how to tell if the home you want to buy is actually more than you can afford? Here are five signs to watch out for.
Buying a home, especially if it is your first time, can be a nerve-wracking, scary experience. This is 100% normal. However, you want to make sure that those feelings are not red flags telling you that you might be making the wrong decision or spending more than you are comfortable with.
Here are five signs you should watch out for to know if you’re about to purchase a home you can’t afford:
1. Creative mortgage terms. If you are not getting a typical mortgage and feel like the loan that you are doing is out of the ordinary, consult with your agent and ask how common that specific kind of loan is. Make sure you are doing your research if you are not doing a fixed-rate, 30-year loan that is straightforward and simple.
2. You need additional funds to make repairs to the home. If you are buying a home that is going to need a lot of work and you are banking on future funds coming your way to do that work, chances are that things will happen in your life and disrupt those plans. You may not be able to do all of those repairs, so make sure you think that through before buying.
3. You can’t afford the monthly mortgage payment. If you have been quoted a mortgage payment and are worried about how you will have enough money before even closing, you probably should not buy. It is one thing to stop making bad purchases on things you do not really need; it’s another to make a life change and have the stress of making enough even after you stopped making those purchases.
4. You need to borrow from your retirement account. It’s your money, but you want to make sure that you understand the consequences of borrowing from your retirement account to make sure it’s worth it. It may be a better idea to do a lower down payment if you are buying a lower priced house.
5. You have a sinking feeling. Anytime someone gets cold feet, the best thing to do is look at the numbers and see if they make sense. If you still feel great about the house, you should probably go for it. But, if you have a bad feeling and all of the excitement you previously felt is disappearing because you are scared, you might want to think things through and slow down the process.
If you have any questions about this or are interested in buying or selling, please feel free to contact me. I look forward to speaking with you soon.