I find this situation very common. Last week I wrote about how to make sure that your budget can handle buying a house. I told you what factors come into play when paying for a house as oppose to renting.
This week, I want to discuss how some people can do all the right things and then still trick themselves into buying a house that is outside of their budget. Now this may seem like something that only an uninformed buyer would do but the reality is that most people end up buying houses that are beyond their budget. Let me explain how this happens.
Lets say you do everything right. You figure out how much you can afford, you crunch the numbers and then you go over the numbers with your mortgage broker. Well when you talk to the mortgage broker they will tell you that you are approved for more money than you expected. But even though you are approved for more money you will still say “no, I just want to stay within the budget I set for myself”. So you hire a realtor to begin showing you houses within your budget. You go and see several houses and although some of them were okay they weren’t what you were really looking for.
After a while you start to get impatient. You and the realtor decide to look at some properties that are above your budgeted amount but you justify this by saying that you will offer a lower amount to buy the property and that will still help you stay close to your budget. After all, the mortgage broker approved you for much more than you are looking for. So you go out and see the higher price houses and after a couple of visits you find the most beautiful house. It has everything you want and then some. So you want to stick to your plan and make a lower price offer, but you don’t want to lose the house.
So you make an offer slightly higher than you planned and hope for the best. After days of waiting the seller counters at a much higher price. You go back and forth several times and finally agree on a price. But, when you look up you are considerably over your budgeted amount. You can still afford the house but you won’t have as much cushion as you expected. This happens all the time and is the way that many people get in trouble. Not to say that this will cause you to lose your home, but it can add more stress to your budget. Take my advice. Only look at properties in your price range. Don’t even think about looking at higher priced homes. You run the risk of falling in love. If you don’t find anything then wait a couple of weeks and look again. This is the best way to stay within your budget.
Till next week, Good luck and God Bless and remember… If you would like to SELL a house with our 2 week home buying program then please fill out an application at www.sellonterms.com