When you are considering buying Real Estate, there are, in fact, some rules that you NEED to impose on yourself.
Let me tell you a little story.
Several years ago, we had a buyer we’ll call him Ted…. no Alex… no Jim.
Jim and his wife were looking to buy their first home. They were preapproved with a Mortgage Broker for X amount of credit based on their debts, savings, etc. Of course, the Mortgage Broker step is crucial. You don’t go shoe shopping without knowing how much you have to spend on shoes. Likewise with your first (or subsequent) home, you need to know what your limit is before you get serious.
So, where was I? Oh yeah, Jim and his wife Tina… no Carol… no Alice.. yeah… Alice…. they were preapproved.
Several times we went out together (‘cause good Realtors take their buying clients out to see properties) and looked at properties of interest to them.
One day, we met up to see some properties and Jim apologized for them being late. He was very excited. Jim had just gone a bought a brand new motorcycle. In his mind, this was awesome. He couldn’t wait to get back from house hunting to take it for a spin.
What’s the issue with this scenario?
Well, first, take a look at the “Ten Commandments of Buying a Home”:
Yeah. Jim had gone and bought a toy and now, Jim and Alice no longer qualified for the same amount of home-buying credit they did yesterday. In fact, Jim and Alice now didn’t qualify for enough to actually buy a home.
Jim, as you can imagine, was no longer a happy home buyer. You can imagine how compounded the emotions were for Alice. And, let’s just say, after that, Jim spent a lot of time with the bike and not so much with Alice, (if you know what I mean).
To add insult to injury, the minute Jim drove the bike off the lot, it had depreciated in value. The home, went up in value. The rent payments they made for the next few years, went to an investors mortgage.
When they (eventually) were finally qualified again, the home they could have bought was now way out of their price range. The bike was worth about 75% of the purchase value and it will now take them, theoretically, approximately 10 years longer to pay off their home.
If you are planning to buy in the next 6 months, year, two years, call us. We can help you with advice that will de-stress and streamline the process (it’s part of our full-service mission.