Don't make this Michigan home buying mistake

My goal as a Michigan realtor is to try to keep my clients out of trouble. What I mean by trouble is that they do not make a mistake that can cost them financially? Do you know the one big mistake you can make when buying a home? This often made mistake can affect you financially for years to come. You do not want to start over because you made this mistake. I bet 10-15% of home buyers make this major mistake of when purchasing a Metro Detroit home. The key is to buy a home you can afford! 10-15% of home buyers either lose the house to foreclosure or are house poor. We just went through a housing market that so many home owners lost their homes in foreclosures or sold them in short sales to get out from the payments. I am going to give you tips and strategies below on how to prevent this from happening to you. My goal as one of Michigan's top realtors with good reviews is to have smart financial buyers that will make the best decision possible.

1007 MALLOW Street, Wolverine Lake$749,000

It makes no sense to buy a house you cannot afford no matter how great of a house it is. It doesn’t matter if it is a big beautiful home in Novi or a lake property in Hartland. I want you to have the house for years to come and not lose it in foreclosure because you couldn’t afford it. You don’t want to start falling behind in bills because the payments are too high. I have seen too many clients that have to sell or loses the house to foreclosure because they bought too big of a home. One is too many as far as I am concerned. The home was too expensive for what they can afford.

When you buy a home you are going to have many additional costs that people do not think about. Some are costs that some prospective home owners forget. You will have insurance, taxes, and cost of maintaining the home. Maintenance of your suburban Detroit home is the one item and biggest item that many home buyers forget about. Can you afford to put in a new furnace if the furnace went out this winter? A furnace can cost anywhere from $2500 to $4000 depending who you hire. A new hot water tank can run you from $800 to over $1200 depending on who you hire and the size of the tank. At some point your roof will need replacing. Can you or will you have enough money to pay for a new roof? Depending on the size of the house a roof can run from $5000 to $20,000.

How do home buyers prevent themselves from making this major home buying mistake? The first thing you should do is figure out what you can afford when buying a Michigan home. So how do you do that? I myself have never done a budget, but analytical buyers will put down what they spend a month on paper. I do it the old fashioned way. For example let’s say I have a rental payment of $900 a month. I want to buy a home that is going to cost me $1500 a year in house payments, taxes, and insurance. What I do is live in my apartment, and put $600 a month away in the bank. I do this for four months to a year without touching the $600 that goes into the bank.

1335 GRINNELL Avenue, Waterford (Cass Lake waterfront) $1,100,000

It is a two-fold reason that I do this. First of all I am seeing if I can live with putting $600 a month into the bank without having to dip into the stash of cash . I am paying $900 a month in rent and depositing $600 into the bank for a total of $1500. Can I afford to do the normal things that I like to do? What will I have to cut out of my life? Or am I scraping by? Did I have to take some of that $600 to live on or do things? Am I dipping into that bank account and taking $25, $50, or more out to keep living the lifestyle I am used to living? If I did then I am going to have problems buying and being able to afford living in a house.

If you are living at home or living with somebody put the whole $1500 a month in the bank and don’t touch it. Or what ever the amount is that is the difference between $1500 and your current cost of living. Now remember the $1500 is just the figure I came up with. Let’s say your new house payment is going to be $1200 and your rent is $900. Then put $300 a way a month.

Let’s say your goal was $1500 a month like me. You put the extra money in the bank but several times you dipped into the stash. You had to get out $100 several times to do things. Well then your new budget for a home should be $1400.

The best part of this is that you have saved a ton of money while figuring out what you can really afford.

5667 Drexel, Dearborn Heights $82,500

Remember it is nice to have a big beautiful home, but you have to be able to afford to furnish it. You have to live. Do you want to take vacations? Do you want to send your kids to college or to pay for a wedding? Do you want to go out for dinner once in a while? If you cannot do what you want or that you have been doing then maybe you are stretching your budget a little too far.

Life is about living. Not about having a big house that is an anchor to you and your family. Many times banks will lend you more that you can comfortably afford to pay each month. Sure they will give it to you, but smart buyers will tell you what they want to have in a monthly mortgage payment. So be a smart home buyer and know what you can afford each month. Stick to it.

Don’t be in the 15% of the home buyers that lose their home to foreclosure, or are house poor for years to come. Remember the extra costs of home maintenance, rising taxes, and rising home insurance costs.

If you have more questions about the home buying process feel free to call me with questions at (248) 310-6239 or email me at yesmyrealtor@gmail.com.

Also remember I offer a great home buyers bonus when you buy and close on a home with me. I will buy you a kayak, or a grill, or yeti cooler.