What Do I do If I Can't Afford The House I Want?
This is a question raised by many buyers especially first time home buyers. Not being able to purchase the house you want does not mean you can't own your own home. Here is the reasons why:-
Q: Why Can't I live in that neighborhood?
A: Choose a different neighborhood, similar to what you want. Gated communities can be more costly to live in because of the HOA fees. The school zoning can affect the price of a homes. Research the schools and choose a home in the area of the school you want your child to to go. It may not be the nearest to the school, but you will be within the boundaries for the school.
Look for a neighborhood that is being developed and get in at the ground floor. Neighborhoods sometimes have cycles. If you get in on the down cycle on the way up you will be a winner.
Q: Why are the HOA fees considered?
A: HOA and condo fees can affect your purchasing power especially when seeking a mortgage to complete the purchase. Banks will consider the HOA fees because they can affect your ability to repay your loan, and HOAs can also foreclose you. HOA fees can reduce your buying power. If you are approved to purchase a home for$250,000 because of the HOA fees this can reduce your purchase price to $200,000. You will be looking for a completely different house.
Q: What do I do if I want a bigger house?
A: Wanting a bigger house should be a need if counting pennies. Wants and needs are two different things. I have heard of buyers purchasing homes to house all their clothes and shoes. If you are struggling to purchase a bigger house for this reason then consider a garage sale and purchase what you need.
Bigger homes also means increase taxes, home owners insurance and maintenance. These must all be considered when shopping for a home. The last thing you want is to purchase a home and struggle to maintain it.
Q: Should I just wait before buying?
A: When the market is low as it is now, buying now s always the best time. Be realistic in what you are purchasing. If you wait to save more money, you will have more cash in a year but the market will likely increase and hence your buying power is reduced.
Buying a home now means you are gaining equity quicker than you can save the cash for a bigger down payment.
Q: Do I just need to save some more money?
A: When purchasing a home cut back on unnecessary purchases. Banks like to buyers with cash reserves when purchasing a home. If you need $15,000 to close try having at least $20,000 cash in hand. It makes you a stronger candidate for the mortgage loan you are seeking.
Q: I want a 4 bedrooms?
A: Wants and needs are two completely different things. Wanting 4 bedroom home is different to needing one. You may want a 4 bedroom home but you may only need a 3 bedroom home.
Q: I have cash I can get a deal?
A: Conducting a cash purchase is great, but it does not mean the seller is going to give their house away for a cash deal. Many cash buyers feel buying for pennies on the dollar is good bid. WRONG. It is often insulting to the seller. You may not even get a response back.
Bottom line if you can afford a home TODAY IN THIS MARKET then go for it, if you need to upgrade do it in a few years when it is not such a struggle. The equity of your existing home will only be a plus, and increase your purchasing power.
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