As a Gurnee bankruptcy lawyer, Burns Bankruptcy sees many clients who have overextended themselves by buying a home before they were financially ready. This is not an issue exclusive to Gurnee, or Illinois for that matter. All over the nation, people buy homes that they can’t afford.
You can avoid this financially dangerous situation by reading this post which explains how you’ll know you’re ready to buy a home.
You have 20% of the home purchase price saved
For most people, the down payment required to buy a home is the biggest obstacle. According to Zillow, the median home price in Gurnee is $235,700. That means a 20% down payment amounts to $47,140 for a middle-of-the-road home purchase in Gurnee.
You may qualify for a loan which allows you to make a lower down payment, but this is risky and costly. For example, let’s say you take out a 30-year mortgage with 20% down at a 4% interest rate to purchase a home for $235,700. With those terms, your monthly payment will be $900.
With a 10% down payment, you pay $1013 each month, which amounts to $40,510 more in total than you would pay with a 20% payment. And that doesn’t even factor in the lower interest rate you’ll get with a bigger down payment.
You can afford the closing costs and fees
Don’t be tricked by the “great offers” that many online comparison sites advertise. There is always more to the story than a single number. And don’t be afraid to ask for help. Fees and closing costs can add thousands, sometimes tens of thousands to the overall cost of the loan. Be wary of this and seek help if you need it.
You can afford the monthly payments.
It shouldn’t be too difficult to figure out whether you can afford a traditional mortgage’s monthly payments. But if you get a loan with an interest-only period, you’ll have a bump in payments when that period ends and you have to start paying the principal back. Ensure that you’re ready to handle that bump.
Take it from a Gurnee bankruptcy lawyer. The financial stress of a mortgage burden that’s too much to handle far outweighs the short-term happiness of an extravagant home purchase.
If it’s too late, and you need to talk to a Gurnee bankruptcy lawyer, give the Burns Law Firm P.C. a call at (847)782-1300. We will help you through the mortgage loan modification process. Call today to get started.