If you’re a homebuyer, there are five signs you need to watch out for that indicate you might be buying a home you can’t afford.
Buying a home you can’t afford is never a good idea, so here are five signs that you can watch out for so you don’t fall into this situation:
1. Your financing has creative mortgage terms. If the conditions of your financing look like a trail mix of mortgages (e.g., there’s a first mortgage, a second mortgage, variable interest rates, or you have to make a balloon payment), that may be a significant indicator that you won’t be able to afford the home you’re looking at.
2. You need a down payment assistance program. If you need help with your down payment, you might be buying a home before you’re ready to own it.
3. You have just enough to cover your mortgage payments. This means you’re at your maximum affordability limit. You don’t want to end up “house poor” and not have enough money after your house payments to live the rest of your life.
4. You’re borrowing from a retirement account. A retirement account is set up for just that—retirement. You don’t want to dip into that account and overextend yourself financially.
5. You have a sinking feeling about the purchase. At the end of the day, if you don’t feel right about the home you want to buy, maybe it’s not the right home for you.
If you have any more questions about this or any other real estate topic or you’re thinking of buying or selling a home soon, don’t hesitate to call or email my team and me. We’d love to help you.