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Are you planning to buy a home this year? Before you embark on this thrilling journey, there’s one crucial mistake you must avoid. It’s a mistake that can potentially delay your home buying experience and impact your mortgage eligibility. So, what is this mistake?
The Materialistic Temptation:
One of the biggest pitfalls I often observe among home buyers is becoming too materialistic before purchasing their first home. It’s natural to be enticed by shiny new possessions like a brand-new vehicle, a recreational toy, or any item that involves monthly payments. However, succumbing to this temptation can have unintended consequences.
The Impact on Mortgage Eligibility:
The problem arises when you finance such materialistic items before buying a house. The monthly debt payments associated with these possessions can significantly affect your income-to-debt ratio, a crucial factor in mortgage approval. For example, a $500 debt payment per month can reduce your mortgage ability by up to $100,000.
The Domino Effect:
This reduction in mortgage ability can be a game-changer. It could mean the difference between a comfortable $300,000 house or duplex in move-in condition and a $200,000 property requiring extensive renovations or located in an undesirable area. The consequences of prioritizing materialistic purchases over your home can be stark.
Pre-Approval and Debt Servicing:
Even if you manage to get pre-approved for a mortgage, the debt servicing you already have can further limit your mortgage ability. If a car payment, for instance, is reducing your eligibility by $100,000, it’s evident how significant this decision can be.
Make a Wise Choice:
To ensure that you’re pre-approved for a mortgage that suits your lifestyle and needs, it’s crucial to avoid this mistake. Consider prioritizing your home purchase over materialistic items. By purchasing your house first, you establish a strong foundation for your future and create a better financial outlook.
When it comes to buying a home, it’s essential to think strategically and prioritize your long-term goals. By avoiding the temptation of materialistic purchases before purchasing your first home, you can safeguard your mortgage eligibility, secure a more favorable loan, and open doors to better housing options.
If you have any questions regarding home buying or selling, please reach out to us. We are here to assist you in your Real Estate journey.
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