How do you know when you are buying too much house

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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When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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