Very few people buy a home with the belief that they could lose the property. Still, mistakes happen, and most of the reasons sellers decide to list their home are due to mistakes they made when they purchased it in the first place.
For example, a seller may place their home up for sale because they cannot stand freeway noises or live under a flight path. Of course, these sellers knew about the issue when they purchased the home, but they were probably swayed by a low price.
Avoid these mistakes when you buy a home so you are not left trying to get rid of it down the road, or even losing it altogether.
Many sellers will scrape together every dollar they can into a down payment for their home, or borrow money from family to pass the underwriting stage of the loan. Many are also facing ongoing money issues, using credit cards and cash advances to cover basic expenses.
Using all of your money just to buy the home puts you in a precarious position. You should have savings left over after your closing costs and down payment to cover any important expenses you may face after you move in.
During the housing boom, adjustable rate mortgages (ARMs) were wildly popular, and many of the buyers who opted for these loans ended up losing their homes when their interest rates reset and sent their monthly payments skyrocketing.
Do not assume that the mortgage with the lowest initial rate will be best for you, because you may end up with a payment you cannot afford down the road. The monthly payment should not be your only concern. Compare loan products and terms to decide which is best for you, and do not be afraid to get professional advice! This decision will affect you for a long time.
You do not need to spend every bit of the money you were pre-approved to borrow. Remember that what the bank says you can borrow and what you feel comfortable borrowing may be two separate numbers. You should not feel under pressure to buy the largest, costliest home you can buy, because you will likely end up house poor and in a very precarious situation. In this case, losing your job, suffering an illness or needing to pay for important home or car repairs can put you on the path to foreclosure.