Are You About to Buy a Home That You Cannot Afford?

Today I have five signs that you may be looking to buy a home that you are actually unable to afford.
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Purchasing a home is a tumultuous process. It can be exciting and promising at times while frustrating and disappointing at others. These ups and downs can wear you out and affect your judgment. This may even result in you making a decision you will later regret. One of these poor decisions that homebuyers often make is purchasing a home that they can’t actually afford. There are five signs that will warn you if you’re about to make this mistake. 1. Creative mortgage terms. If your financing conditions look like a trail mix with multiple mortgages, interest only, adjustable rates, extended term, balloon payment, etc., it may be an indicator that you are unable to afford the home you are looking at buying. 2. Down payment assistance. There are many programs that are designed to help homebuyers with down payments and closing costs. However, although they are intended to remove the barriers to homeownership, they are not always helpful. If you are not prepared for the financial aspects of purchasing a home without assistance you may be unable to afford the home you are looking at buying. 3. You have just enough to cover the down payment. When you’ve done your due diligence and talked with a lender to help you determine a payment that can fit into your budget and there’s no wiggle room, keep in mind that homeownership goes beyond your mortgage. Besides your monthly payment, you will need to cover the costs of maintaining the home and property as well. Broken appliances and a leaky roof are unexpected expenses you need to consider.
Don’t get so caught up in the emotion of owning a home that you are blind to the reality of the situation you’re entering.
4. Borrowing from a retirement account. Many homebuyers borrow from their retirement accounts to help cover their down payments. While you may be able to do this without penalty, remember that you chose to save the funds for your future retirement. It may be a warning sign if you are dipping into your retirement savings. 

5. You have a sinking feeling. Cold feet are common since this is one of the biggest purchases you will ever make, however, if you can’t shake the feeling, it can be a good indicator that you should turn back. It is not easy to admit, but you will know deep down if the home you are buying is too much, even if it means passing on the home you had your heart set on. You want to avoid making a decision that you will later regret. 

In conclusion, do not get so caught up in the emotion of owning a home that you are blind to the reality of the situation you’re entering. Ideally, your team of professionals will guide you to the best decision, however, you are still the one that has to choose what is best for you.

If you want to avoid going down a path you may later regret, be aware of these warning signs and be willing to delay the purchase of a home until you can afford it. If you are ready to buy now, though, please feel free to contact our buying specialists. We would be happy to help you.