Your Worst Decision

Straight Talk:

There are a lot of things you can do that are REALLY bad during the process of purchasing your new home. The obvious bad things, or maybe not so obvious, are; Taking on new debt of any type, applying for new unrelated credit in general, buying a new car, and the most common mistake that messes up someone’s home purchase, buying new furniture. Just because payments are deferred, doesn’t mean they are not accounted for!

It’s funny how many home buyers think they can get something like this by the underwriters just because they’re now approved. Remember, typically a pre-close credit report is pulled to insure you have not done ANY of the above. If you have, surprise, chances are, your loan is now DOA.

Unfortunately for many first time home buyers, there is something even worse than any of these pre-mortgage gaffs.

The absolute worst thing you can do is to buy more home than you can really afford. Usually, this is encouraged by wanting the really extra nice stuff, or a real estate agent “Up Selling” you, the buyer. Unfortunately for buyers that fall into this trap, they don’t find out until the 1st mortgage payment comes due that maybe that bigger house wasn’t such a good idea!

So how do you know if that’s what your doing? Well, the easy answer is found in a simple question. Do you struggle to pay your current rent every month? If you do, then you’ve answered the question all by yourself.

If you have no problem meeting your current rent, then experiment. The next time your rent comes due, pay it, then pay yourself the difference between the rent and mortgage payment you THINK you can afford. The difference should be placed in a saving account. Do this for a few months. If at any time you have to touch the savings, then you are definitely stretching and you need to reevaluate your exposure.

Don’t let anyone, including friends, family, a Realtor® or Lender, encourage you to spend more on a home than you know you can afford. Don’t put yourself in a position where you must sell your new home, or worst yet, find you have paid someone for the privilege of being foreclosed on.

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