Dont Buy A House That Puts You At Risk

Dont Buy A House That Puts You At Risk

Don’t buy a house that puts you at risk

That’s the best way I can say: don’t overspend…but also, don’t buy too small either. Your lender will give you a loan limit, based on your debt-to-income ratio. But you don’t have to spend up to your limit. You must decide what your comfort limit is, and ask that crucial question, “Can I afford to live in this house?” If you overspend that, you are at risk in 3 ways:

  • risk being house-poor. With every extra penny going to a mortgage, you risk quality of life. This is a personal decision.

  • You risk by not having any margin in your finances. What if one family member looses a job, or gets a decrease in pay or employment? Again, only you can decide your risk tolerance.

  • You risk other financial goals when you overspend on a home. Over time, those unmet goals, whether they be travel, education, or future savings, take a toll on your quality of life. Be certain.

On the other hand…sometimes being too conservative is not the right choice. Buying a house that won’t meet your needs in the next 5 years also puts you at risk.  When you are cramped for space and need to sell, you won’t have the equity to cover the costs.

If you are in a position in which you are certain of increasing income over the next few years, you may want to consider buying a larger home at the top of your price range. The choice is, of course, yours, and the risks need to be assessed. If you buy a house that is going to be too small when you have an addition to the family next year, or that isn’t in your preferred school district, for instance, that will be a problem. Sometimes it’s the right decision to stretch. (always consult a licensed financial adviser)

Use Your Realtor®! A good professional is key to navigating the lending rapids. Your real estate agent will have trusted lending professionals that they will recommend. Our team of professionals, whether lenders, title attorneys or home improvement, are interested in the best possible experience for you.

Mindy Herbold 

American AllStar Realty


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Phone: 602-390-2801
Dated: October 17th 2018
Views: 227
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