How smart are you? – A big home buyer mistake

So many home buyers are still making this big home buyer mistake in 2014.  I am taking out new buyers each week and I still see Metro Detroit home buyers doing the wrong thing.  So my question to you is “HOW SMART ARE YOU?

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One of the biggest mistakes that I see home buyers still making is buying a home that is stretching their budget beyond common sense.  It does not matter whether you are young or old.  Experience home buyer or first time home buyer.  Home buyers of all types bury themselves in a home payment.  Your goal as a home buyer is to be able to pay off your home at the end of the thirty years.  I sell homes for too many clients that are barely walking away with any money when they close.

They have lived in the house for twenty years or more and yet they are walking away with a minimum amount of money because they used their home for a bank.  They have borrowed money to pay for vacations, kitchen updates, roof repairs, college educations, and their children’s weddings.  I hope your goal is to have your home paid off before or when you retire.  If you are one of my clients I hope you do not have to move into an apartment because you cannot afford the home you are living in when you retire.

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Let me tell you about a recent older couple that I was working on and off.  They lived on a lake canal.  They recently had a $20,000 assessment for canal dredging.  They were in their early 70’s and the assessment could have been paid over the next ten years.  They took the money out of their very small retirement to pay it off right away.  They had called me to help them find a new home.  They were some what on the way to be hoarders.  So at 70 years they wanted to buy a bigger home.  They were going to buy a home with higher utility costs, and higher taxes than their current homes.  So do you think they were making a mistake?a+

I recently knew another person that had to sell their beautiful lake home because they were close to retirement.  They had to move to a small bungalow in Waterford because they could not afford the home anymore.  When they had bought they had stretched themselves into a very big lake home.  Over the years they could not afford to pay for a new roof without borrowing against the house.  They redid the kitchen and borrowed against the home.  They had such big house payments they could not afford to save for their children’s college education.  They borrowed against the home.  So they borrowed against their home again.

When it came to selling their home, they walked away with barely enough money to buy the Waterford bungalow with 3.5% down!  So do not make this same mistake.  Buy below your means.  Do not be house poor.  Most lenders will qualify you for a bigger payment than you may be comfortable with.  It is ultimately up to you to make a decision on what you can afford to pay each month.  Nobody else can do it.  So be smart….enjoy life and do not live to make your house payment.

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