{"id":623,"date":"2017-05-13T22:19:01","date_gmt":"2017-05-13T22:19:01","guid":{"rendered":"http:\/\/www.mikeclover.com\/blog\/?p=623"},"modified":"2018-11-01T23:21:25","modified_gmt":"2018-11-01T23:21:25","slug":"stop-before-you-dive-into-a-mortgage-you-cant-afford","status":"publish","type":"post","link":"https:\/\/www.mikeclover.com\/blog\/2017\/05\/13\/stop-before-you-dive-into-a-mortgage-you-cant-afford\/","title":{"rendered":"Stop! Before you dive into a mortgage you can\u2019t afford\u2026"},"content":{"rendered":"

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\"Children<\/a><\/p>\n

If home prices in your area are rising and you\u2019re worrying about ever becoming a homeowner, stop and think.<\/p>\n

Remember all the families who lost their homes after the real estate bubble burst? Many of them were in over their heads, simply because they got in a panic and purchased when they should have waited.<\/p>\n

So what should you do? First, consider your options. To do that, you need to evaluate your financial position as it stands today.<\/p>\n

Look at how much you have saved and how much you have coming in each month.<\/p>\n

The safest, least expensive way to purchase a home with a mortgage is to make a down payment of 20% of the purchase price. That eliminates the need for mortgage insurance and lowers your monthly payment. You can<\/em> get a loan with as little as 3% down \u2013 but should you?<\/p>\n

After making a down payment, you should have reserve funds to cover not only closing costs and moving expenses, but unexpected repairs to your new house. Things do happen.<\/p>\n

The rule of thumb is that you should spend no more than 25% of your monthly take-home pay on your mortgage payment. Whether you should spend that much depends upon your income and your other obligations. Remember also that you should continue putting money aside \u2013 for home maintenance and for your future.<\/p>\n

Remember that when a lender qualifies you for a specific amount, he or she doesn\u2019t know your lifestyle and doesn\u2019t know about your family obligations. Use your own common sense and good judgement.<\/p>\n

Now that you\u2019ve looked at your situation \u2013 should you (or can you) buy the home of your dreams right now? <\/strong><\/p>\n

If the answer is no, consider these three options:<\/p>\n

First and most obvious \u2013 keep saving. <\/strong><\/p>\n

Make sure you and your spouse are in agreement, then work to pay off any outstanding debts and put more away toward your down payment.<\/p>\n

At the same time, work on ways to increase your own income. With a bit of extra effort could you get a promotion and a raise in pay? Do you have a side business you could spend more time on and cause it to grow? Could you take a second job part-time to gain those down payment funds?<\/p>\n

How about reducing the outlay? Would it be worth skipping that concert or dinner out to put an extra $200 in the down payment fund? Do you really need<\/em> that new swimsuit this season? Can you live without those new shoes, a new golf club, or the latest iPad?<\/p>\n

A few lifestyle changes can build that fund faster than you might think.<\/p>\n

If you\u2019re determined to buy now\u2026<\/strong><\/p>\n

Re- think what you really must have. <\/strong><\/p>\n

REALTORS\u00ae today report that most buyers \u2013 even first-time buyers \u2013 are looking for homes that appear sparkling new. They want move-in ready, with all the latest upgrades including commercial kitchen equipment in nz<\/a>. They want fresh paint, new flooring, and a landscaped yard.<\/p>\n

As a result, there\u2019s extreme demand for houses that fit the description. Quite often there are bidding wars and the selling prices rise beyond the asking prices.<\/p>\n

Meanwhile, perfectly good homes that need a little work are often ignored \u2013 and their prices reflect it.<\/p>\n

For the difference in the price \u2013 and in your monthly mortgage payment \u2013 you could afford to make those upgrades yourself, a little at a time. The bonus to that is you\u2019d be the one choosing the materials and colors, and the house would become uniquely yours.<\/p>\n

Follow these guidelines to make a smart investment in a \u201cless than perfect\u201d home:<\/p>\n