3 Financial Tips for New Homeowners
Welcome to homeownership! It’s exciting to finally own your own home, but it comes with lots of new responsibilities. Whether you’re just starting out or have been a homeowner for years, here are some financial tips that every homeowner needs to know.
#1 - Understand the price point that you are qualified for based on your income/assets/debt.
Contact a mortgage broker to get a pre-approval. This will tell you exactly what the price range is that you should be exploring when looking at homes on the market. Your mortgage broker can help you explore down payment options available as well. While putting 20% down is the “ideal” situation, it is not always realistic and forces you to turn a liquid asset into an illiquid asset.
#2 - Understand your monthly budget and what adding the mortgage means to your bottom line.
Start by completing a budget worksheet to see what the monthly cash flow is after income and expenses. Leverage your mortgage brokers knowledge. Ask them to run scenarios for you with homes you may be interested in, and ask, “what is the total monthly cost you could expect between mortgage, insurance, and taxes?” A general rule of thumb is that your monthly mortgage should not exceed ~28% of your total monthly income.
#3 - Lastly, as discussed in my previous blog posts, make sure you have a 3–6-month emergency savings bucket built up.
There are a lot of unexpected expenses that can pop up when buying a home and you want to make sure you are fully prepared. The emergency savings will help to prevent you from taking on any unnecessary credit card debt.
So, are you finally thinking of taking that next step to buying a home? Make sure to do your research first and get informed about your financial options. Reviewing a home loan is an important decision and should be taken with care. If you are not sure what you are getting into, talk to an experienced professional.
I’ll be happy to work through this process with you. Reach out to me and schedule an appointment here!
Registered Representative of, Securities and investment advisory services offered through Hornor, Townsend & Kent, LLC. Registered Investment Adviser. Member FINRA/SIPC. 600 Dresher Road, Horsham PA 19044. 800-873-7637, www.htk.com. HTK is a wholly-owned subsidiary of The Penn Mutual Life Insurance Company. HTK does not offer tax or legal advice. Caserta & de Jongh, LLC is unaffiliated with HTK. For Educational Purposes Only - Not to be relied upon as financial advice. Not all topics discussed may be suitable for all investors.