Buy a Home You Can Afford With the Mortgage Suitcase Trick

Raise your hand if you’ve ever tried to stuff more than you really need into a suitcase. You begin with good intentions, wanting to make sure you have everything you need for your trip. You don’t really know if you’re going to need that extra sweatshirt, but you throw it in just in case. Before you know it you’re sitting on the lid of your overflowing suitcase just to get it closed. Although you’re finally able to zip it up, the real bummer is that you have to drag around that heavy suitcase your whole trip.

Unfortunately, this scenario of trying to stuff in more than you really need isn’t just limited to packing your bags. When buying a home, it’s easy to convince ourselves to buy more than we need even though it stretches our budget. As a result we end up dragging around tens of thousands of extra mortgage debt for the life of our 15-30 year loan.

The mortgage suitcase trick is simple and can help you avoid buying too much home. Picture your housing budget as a suitcase. Every time you think about adding another feature or upgrade during your home buying decision, ask yourself if you really want to lug around the cost of that feature for the next 15-30 years.

While the mental image of a heavy suitcase busting at the seams can be an overspending deterrent, I know sometimes it helps to have more concrete guidelines. So here are four tips that can help you avoid overloading your mortgage suitcase. (See also: Quiz: Am I Really Ready to Buy a Home?)

1. Know Your Limits

Before you even start looking at homes figure out how much house you can afford. Just because you’re pre-approved for a certain amount doesn’t mean you have to spend that much or that you can really afford it.

It helps to run through some “what-if” scenarios to future-test the limit you decide on. What if one person decides they want to stay at home with the kids? What if you lose your job for six months? Whether you’re looking at a 15 or 30 year loan, a lot can change in your life during that time, so try to take that into account.

2. Define Your Priorities

There are many different factors that come into play when you’re trying to find the right place to live. Chances are you’re not going to be able to get everything you want in a home, so it helps to prioritize what is most important to you.

This list will come in really handy when you’re comparing multiple properties and having a tough time choosing which you want and how much money to offer the owner.



3. Don’t Shop Up

My wife likes to watch these house-hunter shows that start with the potential buyer listing off everything they’re looking for and what they want to spend. Many times the real estate agent will tell them they can’t get everything they want at the price they’ve set and will proceed to show them more expensive homes.

Once you see the home that meets all your criteria, you’re going to want it. However, if you can’t afford it then, you’re just making yourself unhappy by looking at it. Two unfortunate scenarios often result from shopping up:

1. Your emotions overcome logic, and you’ll break your budget to buy the home.
2. You don’t buy it but “settle” for less and are unhappy with the home you buy.

4. Beware Payment Justification

When you’re going through the process of buying a home, most everyone involved will be happy to tell you that a more expensive property “only raises your monthly payment by a little.” Your realtor wants you to buy. Your bank is probably happy to lend you more. Sometimes your spouse/partner/friend will even jump on board and argue the case that another $20-30K doesn’t raise your payments that much.

If you’ve done steps #1 and #2, then you’ll know what you can afford and what’s important to you. Don’t let other people talk you into spending more than you’re comfortable with. You’re the one who has to get out of bed and go into work every day for the next 20 years to pay off the mortgage.

source: wisebread.com

Five Biggest Mistakes When Buying Property Abroad

Buying real estate is never a simple task, but it becomes even more complex when the property you are buying is in a foreign land whose laws and practices you are not familiar with.

Still, the lure of low prices and high returns invites many of us to buy property abroad, and often, they are good investments indeed. It's just a matter of knowing how to be safe and do the transaction right and avoiding these five huge property-buying mistakes:

1. Judging with your eyes closed. Many of us fall in love with a property, simply because it's located in what looks like a good neighbourhood, or because it reminds us of our childhood home. In real estate, as in real life, when we fall in love, we tend to decide with our eyes closed - and that's never a good idea when you're making a high-value purchase.

No matter how much you like a place, examine all the details of the structure itself: Are the walls sound? Do the floors feel solid or creaky? Are there signs of water damage? Are the drains and pipes working? How is the insulation?

You don't expect to find a perfect house, but make sure you see the imperfections clearly before you decide to buy.

2. Overestimating one's capacity to pay. There is a rule of thumb that says, "Never buy a house that will eat up more than 25% of your take-home pay." There is a sound reason this rule was made; ignore it at your own peril.

Remember the price of the property is not the only thing you'll need to shell out for. There are property taxes, maybe even association dues. Make sure you get all these costs out before you sign anything.

3. Ignoring the background of the property. Why is this property for sale? Has it been in escrow but fell out? How long has it been in the market? If it's been for sale for half a year, you may be able to get more concessions. And why are people not buying?

To get the answers to these questions, you need to meet your neighbours. They can (and often will) tell you the background of a house, why the owners left, why it's taking time to get sold, how quiet it is at night, how difficult it is to get a cab, how bad the traffic can get, how far the nearest schools, churches, and stores are - important things that your agent might not tell you.

4. Making the listing agent your buyer's agent. Self-defeating! Listing agents are required to protect the seller's interest, not the buyer's. Why, then, would you want to rely on somebody like that?

It costs nothing but time to get a trained buyer's agent on your side. Just make sure you get good referrals or carefully check previous clients' reviews. A good agent can help you get a good inspector and check a whole bunch of important stuff such as titles, zoning and easements, right of way, official permissions, status of tax payments, property registrations, and any legal impediments on the property or its supply of utilities.

5. Not getting a local lawyer. If you were buying property at home, you would never dream of doing so without the help of a lawyer you can trust. And yet, so many people do exactly that when buying property in a foreign land! You don't need to look for a lawyer yourself; a good agent can refer you to one. But make sure you have an English-speaking lawyer who is a native of the country where you are buying property from, to help you make sure everything related to your purchase is going as it should, correctly, legally, and fairly.

If you are looking to buy property somewhere in Europe for example Spain, Germany or Portugal property you will come up with different regulations local knowledge is valuable when purchasing overseas.

Portugal Property Sales agent helping you find your dream home.

Article Source: http://EzineArticles.com/?expert=Louise_Goldstein