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How Much House Can You Afford? – The Importance Of Finding Out First

Dead end signI just finished meeting with buyers. The wife had contacted me last week looking for a home. In a matter of 2 days the perfect home was found. Perfect as far as desires go. I was told a mortgage broker was involved and that the house was in their price range. The lady loved the home so much I showed it 3 times in one week. Once to her and 1 child, another time to her and the two other kids, the last time to her and a family member. I was happy to do it. Her enthusiasm was contagious and I love looking at houses. Today I met with her and her husband so I could explain the home buying process and discuss numbers. I’m not a mortgage broker, nor do I play one on TV. Heck, I don’t even play one in my day-to-day real estate dealings. I know the basics. All of them. I know the guidelines and can tell someone if they are in their price range. But when it gets down to the nitty-gritty, I send them to a mortgage broker or a direct lender so they can be told the hard number facts. As we sat in my office and discussed the lending guidelines it became obvious to the husband and myself that they couldn’t afford this house. They would have been hard-pressed to afford a home $100,000 cheaper. The wife kept insisting they could do it. I saw the stars in her eyes. He kept insisting it was above their means. I saw a dedicated husband who was trying to provide for his family but was a realist and knew he could not afford a mortgage that was 87% of his gross pay. The discussion between the two of them escalated and she accused him of not wanting to provide a better home for their children. I started to feel uncomfortable. He got my respect when he kept his cool and calmly told her that they simply could not afford the house. When her disappointment was apparent and tears welled up in her eyes, I wanted to hug her. But I didn’t. She accused him again of not wanting to better himself. He realized where the discussion was headed and he stood up, thanked me for my time and told me they would go home and discuss this in private (as I had suggested when things started to get personal). As they left my office, I had a deep admiration for this man who did not get caught up in the name-calling and handled himself with dignity. He had seemed slightly uncomfortable to have had this discussion in the presence of a stranger but he didn’t seem angry, just disappointed. I also felt terribly sorry for a woman who had been caught up in a pipe dream that could never come to be. I always meet with all parties to a transaction first so we can make sure we are on the same page. This time I made an exception. My schedule was very flexible this particular week and I was able to accommodate all her excited requests for showings, even though I had not met with both her and her husband yet. She insisted they had been to a mortgage broker and he had pre-qualified them. I won’t take anyone’s word for that in the future. I can’t help but feel at this very moment that I was privy to someone’s dream being yanked away from them and their being left holding the tattered remnants of it. Facing reality is often hard. It is easy to make excuses and blame it on things which have nothing at all to do with that reality. Did she even understand? Or would she continue to blame her husband for the fact that they would never live in that home she had fallen in love with? I don’t know. I just know that right now, I’m feeling the effects of that broken dream and it wasn’t even my own.

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These articles are not intended to give legal or tax advice, and you should consult your attorney or financial advisor for additional information.

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