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Thinking of purchasing a home? Here are five signs you need to watch out for that indicate you’re about to buy something you can’t afford:
1. Your mortgage package is a trail mix of different programs. Your lender may offer you a variety of different loan programs to consider, and what they might be selling you on is a mortgage package that will help you afford the home today that you’ll be able to refinance out of later. The problem with this, though, is that there’s no guarantee you’ll be able to refinance into a better program. And if you can’t, then you’re simply locked into a home you can’t afford.
2. You’re relying on a down payment assistance program. If you need assistance to purchase the home, perhaps you shouldn’t be purchasing to begin with.
3. You have just enough money to cover the mortgage. The downside to this is you might have to deal with some of the unexpected costs of maintaining the home, but you’re only budgeting for your mortgage
payment. Don’t forget—taxes and insurance need to be paid on the home as well, so if you don’t have a lot of financial wiggle-room outside of your mortgage, you should reconsider your purchase.
4. You have to borrow from your retirement fund. While you can borrow from your Roth IRA right now without any penalties, your future might end up paying a penalty down the line because you’re stealing money from your retirement. Remember why you were saving that money to begin with.
5. You have a sinking feeling about the purchase. If you’re getting into a situation you don’t feel comfortable with, it’s best to walk away than be stuck with a home you can’t afford that will do you more harm than good in the long run.
If you have any other home buying questions or any other real estate needs at all, don’t hesitate to call or email me anytime. I’d be happy to help you.