You’ve been pre-approved, you have your Realtor® and you’re ready to get going!!! If you have it your way home ownership is going to happen very soon. You just saw the house of your dreams, and no one will stop you from getting it. You can see it all coming together: The key turning, you walking into your new home and you can smell the fresh paint on the wall. Although you have been pre-approved for much more than you could have ever imagined you don’t care what the price is. YOU WANT THIS HOUSE! Wellllllll….. Let’s pump the brakes just a little bit. Should you give some real consideration to the question What can I afford? Yes.
Would it be practical to purchase a home you are very comfortable and pleased with, but not at the max amount that you are approved for? Example: You’ve been pre-approved for $500k but you are comfortable at $350k. Why not go for the max? If you are having some serious concern, consider a few pros and cons to purchasing at the max approval amount.
A few pros and cons to keep in mind
Pros:
- You can get the dream home you always wanted
- You are the envy of your friends and relatives
- This could end up being the future home you always wanted instead of the 2nd or 3rd after the starter
- It could be the home you grow old in. You’ll create countless memories and a legacy for generations to come
Cons:
- The dream home you always wanted has become a nightmare to pay for
- You NOW envy the extra money, time, and vacations your friends and relatives have
- You’re headed to foreclosure and now have to move in with your in-laws
- The heartache of leaving this home makes you feel like it’ll take generations to get over it
DQTs (Diana’s Quick Tips)
- Count the cost of the investment
- If your mind is swimming because you perceive that there is a strong possibility that with one small hiccup there could be a house quake, STOP! Make sure all your numbers are in order, and you can truly balance this purchase with your other financial responsibilities. Do adulting the right way. There is no shame in being a responsible adult by purchasing a home you know you can afford and enjoying your investment.
- Don’t compromise on your purchase regardless of what you decide to get
- Get the best home that you can get at the price level you decide to buy. Get a home that you will be happy with. If the ultimate dream home is not the current purchase, there is no reason why this home can’t be a pleasant place to lay your head. If you do go for the dream home, make sure everything checks out and don’t get captivated by the glamour and fail to properly count the sheep!
- Be ready to live with the decision you make
- No one can tell you what’s best for you. Be willing to live with the home you purchase and make it a good, open, honest decision.
Remember: Your pre-approval amount doesn’t mean you have to purchase a home at that price.
Now that you have your plan together and you know what you will spend, where do you begin in your search? We’ll discuss this in our next article.