House Poor: 3 ways to end up a church mouse

​A third of Canadians say they're "house poor" and twenty percent regret their purchases.

​How did we get here?  For homebuyers, here's three ways to end up a church mouse.
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1. Shopping above your price range

It’s exciting and easy to look at nice homes listed on the internet, and it’s also easy to wander off into listings that are above your price range. Low interest rates and reduced inventory have led to panic buying, so don’t get pulled into the vortex of buying beyond your means.

Buyers, especially first-time buyers who are unfamiliar with operating a house, may underestimate the costs involved – especially if they are unable to provide maintenance, and some repairs on their own.

Stay within your budget and realize that interest rates will go up, but house prices might not - at least not as fast. Avoid sinking too much of your income into mortgage payments, or you might end up a  church mouse .


2. Blind Bidding

It’s a tricky business at best, and in a seller’s market it can suck you right in. You don’t know what other buyers are bidding which seduces you into bidding high to get the house. You might just beat the next-highest buyers offer, or you might win the auction at an unnecessarily high price. 

If you have to make a blind bid, don’t offer more than you are comfortable with. Set a budget and don’t allow your emotions to take over and bid beyond your budget. (“It’s the perfect house in the perfect location, and I know I’m gonna be stretched thin, but this is my last chance. I’ll never find another one like it.”) 

In addition to overpaying for the house, even if you were pre-approved for financing at your bid level - when the property appraisal doesn’t meet with your bid, you may not secure the full amount of financing you were expecting.  When your offer is accepted and you don’t have the funds to fulfill the purchase, in addition to upsetting everyone’s apple cart you might be in line for a lawsuit. 
 
Ouch.


3. Forgoing a home inspection

Unless you have a substantial renovation budget or a healthy emergency fund, skipping the home inspection can also be risky business. In a seller’s market you’re trying to make your offer the most attractive, but sometimes winning can lead to losing – especially when unrecognized problems haunt you down the road. 
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Home inspectors are trained and experienced in recognizing problems that are not obvious to most homebuyers.  The trick is, a lot of the most onerous problems are exactly that… not obvious.

In addition to obtaining a professional opinion of the overall condition of the home, you can be made aware of hidden or unrecognizable defects or potential problems. You’ll also get an explanation of how to operate and maintain the home. An inspector can give you a wealth of information about the different types of systems and components involved, also covering how each system works, life expectancy, current conditions, and advice that will help you to move in and live more successfully in your new home.  

You can think of the inspection as a seminar in home ownership.

Learn More:  Four kinds of home inspections​