One of the strongest builders of wealth in America real state. People can buy a house and literally turned their lives around for the better and over the course of time become extremely wealthy as a result of owning real estate. If you’re going to go broke after you make your mortgage payment each month you might want to pull back and reconsider what you’re doing…
Don’t bite off more than you can chew. If a mortgage payment is going to put you in a position where you and your family are not going to be able to plan for the future, save money, plan for the kid’s college education, for example, you’re buying too much house and you need to rethink your priorities. Going broke after you make your mortgage payment each month meaning having nothing left over for other expenses in your life is a recipe for financial ruin and the reason being is because the mortgage payment is too high in relation to your income. Just because the mortgage company says that you can go by a 700k for a house for example doesn’t necessarily mean you should. At the end of the day, you need to put yourself in a position where you can blend the mortgage payment into your cash flow and long-term goals for that property.
That is far more of a prudent real estate strategy than buying a house by the skin of your teeth and hoping for the best. Hope is not a plan. So let’s say that you can buy a 700k house but that payment is too high in proportion to your income. Go buy a $500k house for example $200k less spending power which will lower your payments about $1400 a month (it’s about $700 a month for every $100kof purchasing power get a house that’s 1400 dollars a month less than a mortgage payment), buy that house and sit on for 5-7 years, and build-up some equity. Then later on as your credit and cash flow and income and finances permit, sell that house and then go buy in the neighborhood that you originally were seeking. That’s a prudent strategy. It is much safer, it’s more pragmatic, you feel better about your financial discretion than trying to overspend and buy a house that you can’t afford from the get-go.
Hopefully, the mortgage company has this approach in mind. If the lender is saying go ahead and buy a $700k house and hope for the best find a different lender. You need a lender whose philosophy is actually is in alignment with what you are trying to do, has your best interests in mind, and not all lenders are created equal. Keep that in mind when you’re getting preapproved and determining whether should you buy a house or should you reconsider the project to better support your family budget.
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