Suffering a case of cold feet over an impending home purchase is normal. It doesn’t necessarily mean that there’s anything wrong, or that you shouldn’t follow through. Odds are your mind is just reeling with a lot of “what-ifs” that can be scary.
Here’s how to silence those questions so you can make this commitment with confidence :
What if I can’t afford my monthly payments?
This is a concern for just about everyone – but especially among people who are buying on the top of their budget. If you’re worried about the costs of homeownership, sit down with your loan officer or financial advisor and review the numbers. You’ll want to calculate the total cost of owning the home – not just your mortgage payments but also taxes, utilities, homeowners insurance and any HOA or condominium fees. Then compare that amount to your combined household income. As a general rule of thumb, your housing costs should be no more than 28% of your gross income. But don’t panic if your ratio is higher; your financial planner may be able to help you create a monthly budget that works for you.
What if I overpaid?
First, consider how much competition you had from other buyers. If you were in a multiple-offer situation, you likely had to bid at, or above, listing price to get the property. Most realtors will show you comparative properties, which you can review before you make an offer. Normally, you won’t make a higher offer than what the comparative market analysis shows. If you need a home mortgage to purchase the property, your offer automatically includes an appraisal contingency. This contingency is required by your lender and involves a third-party appraiser assessing the value of the property. If the appraisal comes in lower than the purchase price, your lender will approve a loan only up to the lower amount – leaving you to decide whether you want to cover the remaining costs out of pocket or walk away from the deal.
What if a better property comes on the market?
Many people experience this second guessing when shopping during the period when there’s more inventory on the market. It’s a valid concern, especially if you’ve viewed only a few properties before you submitted an offer on the home. However, when realtors encounter this, they should help their clients put things into perspective. Realtors can let their clients know that they have already looked at hundreds of homes online before they fell in love with the one that they found. Buyers don’t credit themselves for the work they did upfront. Still afraid you’re going to miss out on your dream home? Ask yourself how happy you are with the home you’re buying on a scale of 1-10. If it’s an 8 or higher, you’re making a good purchase. You can look for over a year and never find a 10.
What if home prices tank after I buy?
This is a valid concern, given how fresh the housing crisis of 2008 still feels. However, this is typically only an issue if you plan to own the home for one or two years, since the housing market may not have bounced back by the time you sell. But if you plan to own the property for at least five years, you’ll likely live there long enough to regain any equity that you may have lost after purchasing the home.
What if I underestimated how much work the house needs?
You may have uncovered more issues during the home inspection than you predicted, particularly if you’re buying a fixer-upper. Still, that doesn’t mean you have to tackle all repairs at once. Instead, use your home inspection report to assess what areas of the house require immediate attention (and money) and what areas qualify as remodeling projects. Then, consider whether you’re up for the challenge. And bear in mind : you don’t need to tackle everything at once.
