As a first-time homeowner in waiting, it is easy to get over-excited and overwhelmed by all the information and options coming your way. I will tell you this: it is an exhilarating experience – one like no other. But, by that very definition, you should know that it can be an excellent memory and a great investment or a tough lesson and a bitter memory.
That is why you need to be smart, strategic and methodical about this entire process. Do not let your emotions cloud your judgement. Like what the famous investor Rick Otton says – you’ve got to know your numbers. It may not sound exciting, but knowing the numbers make you better at assessing the quality of the deal, not your feelings.
Here are some situations that let you that you should say NO to that first property deal.
It is beyond what you can comfortably afford
Yes, maybe this is your first job or you just got a promotion and things are looking up. In that kind of mind space, anything is possible. Who knows, maybe you’ll get a better job or another raise in 3-5 years and things will be better. So you decide to take up a mortgage that is going to wipe the floor with you for these next three years until that promotion or better job comes.
That is a plan that sounds shaky from the word go. But it’s a plan that more adults make and live by than you would think. These are the kind of mistakes you should never make when buying your first property. Sure, that house is just like the one in your dreams, but can you afford it? Honestly, there are a lot of other expenses that come with owning a house that, if not accounted for financially after the purchase, will sink you deeper into debt. Buy what you can comfortably afford, if not, say NO to that property deal.
You are not pre-approved
Unless you have the hard cash to pay for that house, you will need a mortgage. The thing is, some estate agents can get you financing, no matter your financial situation. The problem comes in when you see the interest rates attached to that mortgage. It doesn’t matter how ‘meant to be’ that house is to you, if you do not have a favourable mortgage, don’t buy it. In fact, this should be the very first step you take when you decide to become a homeowner.
Find out what kind of lending options you have by getting pre-approved for mortgages. The interest rates and the terms should guide you towards the kind of property you can afford. If you are not pre-approved and do not really know how heavy the interest rates are going to be, especially if they are variable, then say NO to that property deal. Get pre-approved first then refer to rule number 1 above.
It’s not in the right neighbourhood
Even if you plan to flip the house, the old adage that goes, ‘location, location, location’ rings true for a good reason. In property sales, location does matter. If that house is a ‘steal’ but is located in a part of town that you would never leave in, then it is fool-hardy to assume that you will ‘grow to like it’ or someone will come along and buy it from you. This is a huge investment, make sure your money is going into buying something that you can see your family growing in and if not, say NO to that property deal.
Buying a house is no laughing matter as much as it might be a happy achievement. These are huge sums of money we are talking about and lifelong commitments to mortgage payments. Make sure you are completely comfortable with it or else, just say NO to that property deal.Tags: buying a house, first time homebuyers, how to spot a bad property deal, when not to invest in a property, when to say no to a property deal