Buying a home is a balancing act between a mortgage payment in relation to present and future expenses. One of the biggest challenges people have when buying a house is being able to plan a family budget around a mortgage payment. Real estate is not black and white, it is not linear, sometimes it’s a little bit backward, sometimes it’s a little bit difficult and sometimes things don’t always go according to plan.
One of those things that might not be going according to plan is your new mortgage payment. You have to be willing to have payment flexibility when purchasing a house. If you are so fixated on a particular payment, you probably should not be buying a home.
Here’s why -If you cannot at least give yourself a $125 per month payment window for the right house, you probably shouldn’t be buying a house. Let’s say you’re looking at a house, for example, at $615,000. The seller of the property is willing to sell you the house for $615,000 but you’re digging your heels in and you want that house for $600,000. $15,000 is far more different to the seller than it is to you as the buyer. For example- $15,000 more in purchasing power represents about $43 a month of payment to you meaning you would need to digest $43 a month. If the $43 extra payment is going to break your decision, stop and re-think the home buying decision.
You can offset $43 a month by paying off a credit card for example and weave the $43 into your budget far more easily than the seller has to forgo $15,000 of cold hard real cash. So, you have to ask yourself, is $43 a month really worth haggling over? If the answer is yes you probably shouldn’t be buying the house- why? It is a lot of time for you, your real estate agent, and your lender to all work for you only for you do not want to purchase a house over $43 a month in this particular example. If, for example, let’s say you had upwards of $125 a month of spending power this would be a non-issue.
Well, let’s say there’s something wrong with the house such as the roof being a little bit questionable or some say unpermitted work associated with the home. You feel the house is worth X, but the seller feels the house is worth Y, you have a disparity between what you want the house for and what the seller is willing to let it go for. Put it on the appraiser. You have to get an appraisal on the house anyway if you’re buying a house with a mortgage.
If the house does not appraise then you have some wiggle room to talk to your real estate agent and have them renegotiate the purchase price on your behalf. In this particular environment with the way things are in most markets with big demand and little supply, you’re going to cut off your nose to spite your face (chase over dollars to get dimes if you will) if you’re willing to let a house go over a super tiny payment difference which can otherwise be absorbed by adjusting your budgeting and/or for example, not going to Starbucks as frequently as you do and putting things in perspective. A good mortgage lender and realtor can help you decide if the home you want is worth having to digest the extra payment which may come in the form of the price difference to obtain the home you want for your family.
Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.