Buying a Home

The Biggest Purchase of Your Life

Financial aspects to consider when buying a house

Buying your first home is a major financial decision. Are you prepared for all the steps involved?

Creating a Budget for Your Home

  • Obtain your credit reports. Federal law gives you the right to one free credit report per year from each of three bureaus. Get your report, and alert the credit bureau to any mistakes you find – before you buy.
  • Determine your price range. Track your spending, and forecast future expenses and earnings. Try to stay within 2.5 times your annual salary. Consider estimated property taxes and homeowner’s insurance, and be more conservative if you have high credit card debt and/or student loans.
  • List your needs and wants. Write the things you need in one column and things you want in another. Keep this sheet in a visible place and update it over a period of several weeks.
  • Get preapproved with a mortgage lender. Talk with different kinds of lenders, such as a big bank, a local credit union, and an online lender. Stick to your budget, even if the preapproval comes in at a higher rate than expected.

Hunting for Your Home

The average new home buyer will visit 12 homes over 12 weeks. Consult a real estate agent’s advice, and also follow these tips:

  • Photograph each home. Take exterior and interior photos, and when you are finished with each tour, make a list of that home’s pros and cons.
  • Do two laps. Prevent emotions from clouding your decision by walking through each home twice during the tour.
  • Keep your expectations realistic. Remember that 99% of home buyers don’t get everything on their “want” list. Always stick to your budget.

Making an Offer for Your Home

The offer step can be confusing, tense, disappointing, exciting, stressful, and exhausting — all in just a few days. Remember this advice:

  • It is okay to submit an offer under the asking price. In order to not lose credibility with the seller, calculate data based on comparative sales to make your offer.
  • Verbal agreements mean nothing. Sellers will reverse your verbal agreement if they get a better offer. Make sure you get everything in writing, and don’t plan to move in until you’ve signed.
  • Don’t expect to negotiate the price down after an offer. The seller might drop you and give a backup buyer a call. Always submit your best offer first.

Closing on Your Home

You’re ready to see the exact figures for your loan value and payments. Consider this before you make it official:

  • Closings can last longer than an hour. Do not try to close in a lunch break. Take at least a half-day from work to avoid the stress.
  • Note the closing date. Close before your loan rate lock expires. Also, coordinate closing dates with your lease end date and other considerations.

Buying a home is a tremendous achievement – whether it’s your first or one of many. Regardless how many homes you’ve purchased, you deserve guidance so that you can feel confident in your decision.

At Lowe Wealth Advisors, our financial planners routinely walk families through these important moments in their lives with the goal of giving our clients peace of mind.

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