There are five sure signs you need to watch out for as a homebuyer that indicate you’re about to purchase something you can’t afford.
If you’re about to purchase a home, there are the five signs you might be buying something you can’t afford:
1. Your loan program looks like a trail mix of mortgages. If this is the case, you might be getting too deep into the financial side of things. “First mortgage,” “second mortgage,” “adjustable rate,” 80-20 loan,” “extended terms,” and “balloon payment” are common terms you’ll hear in these types of situations. The most common mortgages are the FHA, VA, conventional, and Alaska Housing Finance Corporation loans.
2. You need a down payment assistance program. If you qualify for one of these, you might be overextending yourself.
3. You only have just enough money to cover the down payment. Oftentimes, lenders will approve you for way more than what you should buy, so you need to be careful of that. If they approve you for $400,000, that doesn’t mean you should buy at $400,000. If you can afford to, that’s great, but don’t feel bad about capping your purchase price.
4. You need to borrow from your retirement program. Keep saving your money and buy when the time is right.
5. Your gut instinct says “no.” If you’re nervous about the purchase because you think the payments are going to be too high, odds are they will be.
Remember, the key to a good transaction is a good lender and a good Realtor. If you give us a call, we can put you in touch with one of our trusted lenders who can offer some great advice.
If you have any other questions, don’t hesitate to reach out to us. I’d be happy to help you.