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Be Cautious of the Post-Home-Purchase Money Trap

post-home-purchase-money-trapWhile in the homebuying process, you may be discouraged from making significant credit-based purchases as they could affect your loan eligibility. Many people, then, wait for their home financing to be approved and to close on their house before going out and purchasing big ticket items. Even though you’re out of the underwriting microscope and free to purchase as you see fit, be careful when taking on significant purchases.

Cautious spending after a home purchase is particularly well-found advice for first-time homebuyers. Understandingly, new homeowners are excited to get into a new home—whether it’s their first or fourth—and want to celebrate their new investment with the best furnishings, appliances, and décor that they can afford. That’s where you need to re-assess what “you can afford” means.

Especially for first-time homebuyers, remember that you’re venturing into a new monthly financial obligation and getting acclimated to a new budget may take a few months to perfect. Don’t rush it. Rather you be financially prepared to make your mortgage payment than have the top-of-the-line latest appliance models. Instead, set a goal (by priority) for those appliances and furnishings that you’d like to purchase. Often times, the leading cause for foreclosures among first-time homebuyers can be directly attributed to overspending and under budgeting when it comes to new purchases. While it’s true that many retail furniture outlets may offer “too-good-to-pass-up deals,” sometimes you should walk away. Small monthly payments may look attractive when considered individually, but shop enough “too-good-to-pass-up” deals, and that measly $35/month furniture payment turns into a whopping $275/month furniture/appliance/mattress/décor bill when all is said and done.

Be patient and meticulous with your post-house-purchase spending. Understand that your first priority is your monthly mortgage payment, and until you can get a comfortable grasp for your new budget, you may have to look at a few bare walls and sleep on that not-so-perfect mattress you brought with you in the move. But, don’t worry. You’ll sleep more comfortably when the time comes to lie your head on your newly purchased mattress—1) because it’s new, and 2) because you won’t lose sleep at night wondering how you’ll make next month’s bills.


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