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Buying Your Dream Home Is A Huge Financial Decision
If your buying a home for the first time-or second, you'll need to remember all those things that the nation as a whole learned the hard way. Here are 5 financial lessons to keep in mind as you navigate the path to home ownership.
1. Your isn't always an investment.
-Thinking of your home primarily as a place to live (rather than as an investment) means far less anxiety over the current price of the property. The longer you live in the property, the more likely you’ll be able to sell it for more than you paid—but that’s not always guaranteed.
2. Home-owner should have an emergency fund.
-Most financial planners recommend that most homeowners have at least six months’ of expenses set aside in an easily accessible rainy day account. That fund gives you the ability to cover unexpected home costs like a broken air conditioner—or the mortgage payments if you lose your job, like many homeowners did during the recession.
3. Be aware of risky mortgages.
-During the housing bubble, borrowers often financed their homes with risky mortgages that had ballooning payments, assuming that they’d be able to refinance before the mortgages reset. But then they couldn’t get approval for the refi because they had lost their job, or the value of their home’s price had fallen into negative equity.
4. Buy what feels comfortable-not what you qualify for.
-Just because a mortgage broker tells you that you qualify to purchase a home for a certain amount doesn’t mean you have to spend that much. Remember: the bigger the house, the bigger the cost associated with it, from taxes to lawn care. Lenders likely don’t know all of your financial priorities. Putting too much money into your home may crimp your ability to travel, put your kids through school, save for retirement—or even furnish that big, brand-new home you just bought! Don’t do it.
5. Home ownership isn't for everyone.
-“They never tell you that home ownership can be a real headache,” We know, we know—home ownership is the American dream. But that doesn’t mean that everyone should purchase a house. Remember: Home ownership comes with lots of responsibilities and surprise costs and taxes.
There are plenty of smart reasons to remain a renter—from wanting the flexibility to easily relocate to enjoying the ability to pass off maintenance on that broken dishwasher to the super.
But if you want something to finally call yours, we’re behind you 100%. Just be sure you can handle it.