5 Signs You Can’t Afford the Home You’re Purchasing

There are five signs that will tell you that you’re about to buy a house that you simply can’t afford.

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Sometimes, when we’re working to help guide a buyer in their home purchase, they’ll ask us how they can know if they’re buying a house that is more than they can swing. Just because they were approved for a certain amount, it doesn’t necessarily mean that you’ll have an easy time managing payments. To gauge whether you’re stretching yourself too thin, keep an eye on the following five signs: 1. Are your financing options unconventional or creative? If you’re resorting to or being offered highly unconventional mortgage options to use in order to make your purchase work, it could be a sign that you’re swinging a little too high. 2. Do you need down payment assistance programs to qualify for this house? If the purchase or sale price of the home is so high that coming up with the down payment is a struggle, then it could be an indication that you’re trying to purchase outside your range.

If you have enough money per month to cover your mortgage, but have little left over for the rest of your expenses, that’s a definite sign that you’re exceeding your limits.

3. Do you have just enough money to cover your mortgage? If you have enough money per month to cover your mortgage, but have little left over for the rest of your expenses, that’s a definite sign that you’re exceeding your limits. Don’t squeeze your budget too tightly. 4. Are you considering taking money from your retirement funds? If the only way to make your mortgage work is to take money from your hard-earned retirement funds, then that’s an issue. 5. Do you have a bad feeling about the purchase? If, during your purchase, you get an overwhelming sinking feeling that the whole thing is a bad idea, it’s a good idea to go with your gut. We do want to help you purchase a home, but you should also be happy with it. You’re the one who has to live in the house and manage your expenses, so your feelings are paramount. If you’re a homebuyer who is experiencing one or more of these signs, or if you’re interested in purchasing a home, please feel free to reach out to me. We’re always here to help and provide excellent service to you.

What to Do When Your Appraisal Doesn't Match Your List Price

What happens when a property doesn’t appraise? Allow me to share a few ways this scenario can play out.

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What should you do if a home appraises for less than the sales price? Well, if you’re the seller of that property: Don’t panic. Hopefully you’ve hired a great agent who will work to appeal the results of the appraisal. If you’ve hired someone on my team, we will do everything we can on your behalf to make sure the deal goes smoothly. When our team works to appeal an appraisal, we begin by doing our research. We gather information on home values in the area and determine what other properties tend to sell for. If, after presenting the findings of this research to the appraiser, the appeal doesn’t succeed, then it’s time to renegotiate with the buyer.

If you’ve hired someone on my team, we will do everything we can on your behalf to make sure the deal goes smoothly.

Sometimes when a home appraises for less than the agreed-upon price, the solution is for the buyer to make up the difference in cash. So if a home’s contract listed its price as $205,000, but the appraisal came in at $200,000, the buyer could still use financing for the appraised amount while making up the remaining $5,000 in cash. The seller could also lower the sales price to match the appraised value, or a combination of these solutions could be negotiated. It’s also important to realize that the loan type a buyer is using to finance the purchase will impact how the scenario can be handled. In some cases, the best option is to seek out another appraiser’s opinion. FHA loans or VA loans will make this more difficult, though, because the initial appraisal figure will stick with the property for some time. If you have any other questions or would like more information, feel free to give my team or me a call or send us an email. We look forward to hearing from you soon.