Top 3: Home Purchase

Experiencing a life changing event can feel overwhelming. In this series, we help narrow down your to-do list by focusing on the Top 3 areas for attention and action. Use these guides and make progress as easy as 1, 2, 3.

1. Accumulate savings for a down payment, associated costs/fees, and emergency fund

Buying a home requires ample cash.  Aside from a down payment, there are several additional costs associated with a home purchase, including realtor fees, attorney fees, appraisals, inspections, movers, repairs, improvements, and furniture, to name a “few.” Open a separate account to set aside funds specifically for a down payment, associated costs, and fees.  For many, creating a designated home savings fund helps solidify the goal, boost accountability, and visualize progress, which can be very energizing.

Additionally, retain a separate savings account to establish a strong emergency fund. While it may be tempting to dip into emergency savings for a down payment, resist the urge at all costs.  Unexpected home expenses materialize when least expected and often carry a hefty price tag. Maintaining an emergency fund will prevent disruptions from daily living and other financial goals.

2. Complete the mortgage pre-approval process

While there are plenty of financial guidelines to ballpark your home purchase budget, pre-approval is the best way to accurately determine your price range. This process will provide key numbers, including maximum loan amount, interest rate, and monthly payment.

A word of caution – what you can afford extends beyond the initial purchase price. Seriously think through your monthly payment and determine its sustainability. Consider expenses and goals the lender may not have factored in, such as saving for retirement, day care costs of current and future children, or if one spouse wants to step back from the workforce. Weighing all these factors will help determine a comfortable and appropriate price range to move forward.

3. Peruse homes patiently

Do not rush! It can be easy to get caught up in the competitive nature of the real estate market but stay in control and remain patient throughout the process. Buying a home is a massive financial commitment that deserves thoughtful attention and time. No property is perfect, so carefully weigh the pros and cons before making a purchase decision.

Patience will pay off - the right home is out there!