Buying a First Home
Buying your first home is a major milestone in your life, but it can also be overwhelming. As a first-time home buyer, there are several things you should consider before making a decision.
First and foremost, it's important to determine how much you can afford for a home. This will depend on several factors, including your income, debt-to-income ratio, credit score, and down payment. You can use online calculators to estimate your monthly mortgage payments and determine what price range you should be looking at, ask your real estate professional for suggestions.
Next, you should consider the current interest rate environment. Interest rates can have a significant impact on your mortgage payments, so it's important to be aware of how they are trending. Currently, we are in a period of higher interest rates, but interest rates can fluctuate over time. When interest rates are low, it may be a good time to lock in a fixed-rate mortgage to take advantage of the lower rates. When interest rates are high, it may be better to consider an adjustable-rate mortgage, which can offer lower initial payments.
As a first-time home buyer, it's also important to consider the other costs associated with buying a home. This includes closing costs, property taxes, homeowner's insurance, and ongoing maintenance costs. Be sure to budget for these expenses so that you can accurately determine what you can afford. A real estate professional should be able to help you with much of this.
Don't forget: working with a financial advisor can be particularly beneficial for first-time home buyers. A financial advisor can help you understand the impact of your home purchase on your overall financial picture. They can also help you develop a comprehensive financial plan that considers your goals and priorities.
Here are some unique ways a financial advisor can help you as a first-time home buyer:
- Provide a holistic view of your finances - A financial advisor may help you understand how your home purchase fits into your overall financial picture. They may help you balance your short-term and long-term financial goals and develop a plan to pursue them.
- Analyze the costs of homeownership - A financial advisor may help you understand the costs associated with homeownership, including property taxes, insurance, maintenance, and repairs. They may help you budget for these expenses and develop a plan to manage them over time.
- Develop a plan for paying off your mortgage - A financial advisor may help you develop a plan for paying off your mortgage over time. Our advisors may help you understand the impact of making extra payments and help you develop a strategy for paying down your mortgage as quickly as possible. A realtor may share benefits about owning a larger SQFT home than you are currently in, but a financial advisor may be able to share insight that affects your larger picture. For example have you budgeted extra cost of utilities for the additional SQFT you're buying? What about property taxes? Those things affect your lifetime of finances, and extend past the typical sale of a house for other professionals.
- Long term care considerations - are important with property if you plan on living somewhere a very long time. My Grandparents lived at the same house for almost their entire lives. Making sure you have enough funds to have the retirement lifestyle you desire is also affected by the home you choose. For example, picking a converted grain silo house may be trendy, but the stairs probably aren’t going to help you in your golden years. Will you have enough for an elevator? Let’s talk! (excuse the ‘corny’ example of a unique property)
Remember buying a home is a major financial decision that requires careful consideration. As a first-time home buyer, it's important to determine how much home you can afford, consider the current interest rate environment, and understand the other costs associated with homeownership. Working with a financial advisor may be particularly beneficial for first-time home buyers, as they can provide a comprehensive view of your finances and help you develop a plan to pursue your goals. Remember to always seek the advice of a professional before making any financial decision.
If you’re not currently a client you can Schedule a FIT Meeting with us at any time by clicking that link and booking directly with the advisor. If you are an existing client, or family of a client, and would like to discuss your purchasing decision for any real estate, or another major investment, our advisors are able to help, you can use the contact form or give us a call!