Many people consider a home to be the most significant investment they make. Many people have the financial tools to find a home that they love and can afford. Sometimes, however, things don’t always go as planned. Here are five reasons you cannot buy a home in South Florida.
5 Reasons People Cannot Buy a Home in South Florida
Not Getting Pre-Approved
You should be serious about getting a loan if you want to buy a house. Do not get pre-qualified. This is merely a guideline and does not give you an official value. Pre-approval is when the lender has looked at your income and credit history. They can assess your financial situation to give you an amount that you can afford.
If you don’t pre-approve, an offer might be accepted for a home. However, the lender may not have all the information necessary to fund the loan.
Don’t Have Funds for closing
People often only consider the down payment when thinking of out-of-pocket costs in the home buying process. Some costs are included in the loan while others are not. You need to be able to pay closing costs. At closing, everything from appraisals and inspections to lender fees is due.
Closing costs will typically amount to between 2-5 percent of the home’s worth. Before starting the loan process, talk to your lender to ensure that you have enough cash to close. If you do not have enough money, you may need to tap your retirement funds, purchase gift funds, or walk out of the deal.
Too Much Debt
When considering whether you can purchase a home, lenders will look at how much debt you have to income. The average monthly debt payment should not exceed 33 percent of your monthly income. While you might have a solid monthly income, if your credit card or car payment payments are taking a lot out of it each month, that is not a financial stability situation that lenders will be happy with.
You should be aware that your student loan may have some type of forbearance. The lender will then use the amount that you will pay once the forbearance has ended.
Get a Credit Line for New Furniture
It’s all happening. It happens all of the time. You anticipate moving in and getting the brand-new living room set delivered for your first football game. The problem is that you were unable to secure the furniture company’s 6-month financing agreement.
It is a credit inquiry and additional debt that can impact your loan. Lending facilities are denied to people even if they have been pre-approved. This is due to credit inquiries that were made last minute. It would be best if you waited for escrow to close before you get your furniture. Although it delays the process for a few more days, this will not affect your financial picture.
Find Your Dream Home
Sometimes you can’t get everything you want. Yes, that’s the old song. This rings true when purchasing a home. While you search, it is possible to wait for your new dream home, complete with a spa bath, large kitchen, and a swimming pool.
Smart buyers will purchase what they can afford in a comfortable place for them to live. They will accumulate equity as they make better payments and the property’s value increases. This equity may be used to pay down the mortgage on the first property and then go on to the next larger, better home. You can be a smart buyer and use equity for your dream home.