I’ve seen so many situations in which people get excited about a home they’ve found and fall in love with it. It’s their dream home, so they’re willing to stretch and struggle to make it work. But unfortunately, that’s sometimes just not feasible.

To gauge whether you’re stretching yourself too thin, keep an eye on the following five signs:

1. Are you relying on creative financing and tax abatement to make your payment? Here in Central Iowa, we have many communities with amazing tax abatement incentives that range from a portion of the value being abated for three to five years to 100% abatement for seven years. Oftentimes people who are really stretching their budgets will combine that along with an adjustable mortgage rate or another creative means to get the financing they need.

“Don’t squeeze your budget too tightly.”

When you know exactly how this works and you’ve done the research that will tell you want your monthly payment will be like in the end, that’s one thing. However, many people just jump into it with plans to figure it out later. That can set you up for tough economic situations in the future.

2. Do you need down payment assistance programs to qualify for this house? If the purchase or sale price of the home is so high that coming up with the down payment is a struggle, then it could be an indication that you’re trying to purchase outside your range.

3. Do you have just enough money to cover your mortgage? If you have enough money per month to cover your mortgage, but have little left over for the rest of your expenses, that’s a definite sign that you’re exceeding your limits. Don’t squeeze your budget too tightly. Some loans are generous with your debt-to-income ratios and will only consider one person in your household’s debt. You need to have a good overall picture of your financial situation.

4. Are you considering taking money from your retirement funds? Now, some people can use this strategy successfully, but that’s highly dependent on their situations. If the only way to make your mortgage work is to take money from your hard-earned retirement funds, then that’s an issue.

5. Do you have a bad feeling about the purchase? If, during your purchase, you get an overwhelming sinking feeling that the whole thing is a bad idea, it’s a good idea to go with your gut. We do want to help you purchase a home, but you should also be happy with it. You’re the one who has to live in the house and manage your expenses, so your feelings are paramount.

If you’re a homebuyer who is experiencing one or more of these signs or if you’re interested in purchasing a home, please feel free to reach out to me. We’re always here to help.