Learn what happens to a 529 Plan if your child does not go to college?

410.363.7211
Print

Seven Things to Do Before You Buy Your First House

September 10th, 2018 | Written by

Buying first homeBuying a home is an exciting and significant event in your life.  Before taking a dive into house hunting, it is important to do your research and have your eyes wide open to reality.  The more you understand about the total cost in purchasing and owning a home, the better off you will be financially.

Do your research on credits and loan programs

There are various programs available.  The research you invest in ahead of time can financially benefit you.  Check out HUD.GOV for some programs you may qualify for by state.

Get pre-approved

Getting pre-approved for a mortgage will help you to see where you stand financially before you start house hunting.  This will give you an idea of the maximum amount you can borrow, what loan programs you qualify for, and what interest rate you may qualify for.  This assessment is based on factors such as your credit score, your income vs your debt, your assets, and your employment history.  The pre-approval process will help you focus your search on properties that fall within your price range.  Also, a seller may consider you as a serious potential buyer because you have a pre-approval letter.

Have an emergency fund before you move in

Having an emergency fund for unexpected expenses is vital.  You never know what may happen.  You may be forced to replace your air conditioning on the hottest day of the summer, you may lose your job, or be hit with high medical expenses.  Fifty percent of people in the United States don’t have a rainy day fund that would cover 3 months of expenses[1].  Establishing an emergency fund to cover home repairs and 3 – 6 months of living expenses may mean the difference between financial disaster and financial success.

Make room in your budget for additional costs

Homeownership goes beyond mortgage payments.  While you want to ensure you are comfortable with your monthly mortgage payments, you should also consider other costs associated in purchasing and owning a home.  Budgeting for these additional costs should not be overlooked.

Below is a list of additional costs to expect before and after you move in:

  • House inspection (not required but encouraged)
  • Home owner’s insurance
  • Home repairs
  • Moving expenses
  • Outdoor maintenance
  • HOA fee (if applicable)
  • Utilities
  • Alarm system
  • Furniture
  • Improvements
  • Closing costs

Interview the future neighbors

Exploring the area and interviewing the neighbors can give you a good insight about the community.  The residents will know more about the area and this may help you to decide if you can see yourself living there.  Below is a list of questions you may want to ask your potential new neighbors:

  • What is it like living here, and how would you describe the community?
  • If you could change anything about the neighborhood, what would it be and why?
  • Is there anything I should be aware of about this home?
  • Is the neighborhood kid-friendly and safe?

Do not be afraid to negotiate

Aside from negotiating on the asking price of the home, which your realtor can advise you on, do not be afraid to negotiate other costs associated with purchasing a home.  Asking the seller for closing help, for example, is a practical strategy to keep more cash in your pocket.  If you are buying an older home, ask the seller to buy you home warranty coverage.  A home warranty will repair or replace many components for a discount.  This coverage can benefit you by avoiding dipping into your emergency fund for major home repair costs.

Apply for Homestead Property Tax Credit

Most states allow homeowners to apply for a Homestead Tax Credit which limits the increase in taxable assessment each year to a fixed percentage.  This program is designed to lessen your property tax bill.  In the state of Maryland, that limit is capped at 10% or less per year. Click here to see what your Homestead Tax Credit rate is.

Do you have other tips for future home owners? Share them with me below!

[1] FINRA Investor Education Foundation National Financial Capability Study, 2015.

Let's Keep The Conversation Going

Send a note.

Tags: , , ,

Building Relationships | Delivering Success®
The Prosperity Consulting Group registered as a Registered Investment Advisor (RIA) in 2005. We have with a passion for providing clients with objective investment advice and wealth management solutions. Our purpose, coupled with our fiduciary commitment, is essential in helping clients achieve their financial goals. Our firm is dedicated to providing unparalleled financial planning and investment advice to individuals, families, businesses and institutions. We have identified key areas that are critical and integral to a client’s financial success. These planning areas encompass: Investment Planning & Management Retirement Planning Estate Planning Tax Planning Business Planning Insurance Planning Income Protection & Asset Preservation Education Planning 401(k) Planning
10055 Red Run Boulevard, Suite 130
Owings Mills
Maryland
21117
United States