excitement “in check” so you can avoid the following common buyer mistakes:
MISTAKE #1: NOT KNOWING YOUR BUDGET OR CREDIT SCORE
Most homeowners in the process of downsizing stand to make a sizable profit and have some extra cash flow to help them out in their retirement years. However, this doesn’t mean that you should automatically assume you’ll be fine and don’t need to think about budgeting or what your budget even is. One of the first mistakes common to all types of buyers is not knowing what they can realistically afford, both when it comes to the price of the home itself, as well as all other costs, such as down payment, monthly mortgage, closing costs, property tax, maintenance, etc. Not knowing what you can afford is the wrong way to go when buying a home, regardless of how much you expect to make off the sale of your current home and regardless of what you expect your future finances to look like. Yes, you should certainly consult a bank, but don’t completely rely on the bank. Yes, most banks will provide mortgage loans to seniors who are downsizing, but that doesn’t necessarily mean they have your best interests at heart. Sometimes, banks will tell you that you can afford a lot more than you actually can, just so you accept the offer — putting you at risk of potential debt. Not how you pictured living out your golden years, is it? Rather, make sure you have an accurate budget, including all your monthly (as well as biweekly, seasonal, and annual) expenses, being as comprehensive as possible. Don’t count your current mortgage, however. Subtract your total expenses from your net income to get a fairly accurate idea of how much you can afford. If this task seems a bit overwhelming for you, ask someone you know who has a knack for number crunching for some help.
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