Everything seems to be a journey these days. Students don’t just attend college, they’re on an “educational journey.” Medical practices don’t just diagnose and treat, they promise a “healing journey.” And if you’ve ever considered buying a home of your own, a realtor will want to take you on a “home buying journey.”
Moving from renting to buying isn’t a single journey, though, because your path will depend on where you are, where you see yourself going, and what you need to do along the way. In fact, your first-time home buying journey is more likely to be a case of “choose your own adventure.”
With that in mind, if you’re thinking of buying your first home – or if you’re helping a family member to do so – find the statement that resonates with you, and choose your own adventure:
Buy a home? But I don’t have enough money
This is a well-worn path. With housing prices historically high, many young adults and families are understandably having a hard time coming up with funds for a down payment. High interest rates also mean potentially unaffordable monthly payments. Still, buying a home can offer a lot of advantages.
Before you write the idea off completely as unattainable, talk to your financial planner. They may be able to identify ways to save toward your goal or organize your finances to make a home affordable.
I don’t see any reason to buy – might as well keep renting
The benefits of buying a home start with the pride and security of having your own place, but that’s not all. Rather than paying your landlord’s mortgage in the form of rent checks, your mortgage payments contribute to building tangible equity. That means every month you own a little more of your house. And, if the value of your property increases, that added value can pay off when you decide to sell and move to a new place.
Now, you may have to keep renting until you have enough money for a down payment, but rather than rejecting home ownership all together, you can start looking at ways to save so you can have options in the future.
My dream is to buy a home, but I have no idea how to get started
There are a lot of ways to get advice about home buying. A friend or family member who’s recently purchased a house could probably point you in the right direction. Just keep in mind that someone who has owned their home for decades may not be up to date on what it takes to buy a home today.
After getting basic advice, you’ll want to connect with a real estate agent and a mortgage broker. Be sure to choose people you feel comfortable with. Homebuying is an exciting but stressful and complicated process, so avoid anyone who doesn’t seem to understand you, acts pushy or preachy, or only seems interested in making money.
I’m not sure I’m ready to settle down
It’s becoming more and more rare for people to settle in one place for most of their lives. Job opportunities, lifestyle changes, or a sense of adventure might take you to a new hometown. That doesn’t necessarily mean you should avoid buying a home. Instead, your decision should depend on how long you expect to stay in one place. In fact, it might make a lot of sense to own a place and start building equity even if you sell it and move on after a few years. Your financial planner can help you think through the rent-or-buy options.
Shouldn’t I be looking for a place that’s a good investment?.
Depending on the location and other factors, real estate can be a good investment – a home purchased ten years ago can sell for a lot more than its original purchase price. But if you buy a home only for its future value, you could be setting aside some of your own needs. For example, a house with lots of stunning features might require a long commute that cuts into the time you have to enjoy it.
Homeowners who prioritize investment value will sometimes sacrifice their own comfort in order to preserve the home for the next buyer. If your goal is to invest in real estate, talk to your financial planner about how you can do that. Your personal home, though, should be all yours.
If you’re thinking about heading down the path toward home ownership, your Arrivity financial planner can help you figure out what you can afford, how to save toward your goal, and how to weigh renting versus buying. An updated financial plan will help you get on with your adventure.
Things to think about when you’re considering buying a home:
- Your financial calculations should include maintenance that will retain the value and comfort of your home – from major expenses like a new roof to everyday expenses like yard work.
- Home mortgages can be structured in many different ways. Ask your broker to describe the options in clear terms and explain why their recommendation suits your circumstances.
- If a lack of good information is stopping you from moving forward, nonprofit consumer advocacy organizations like Washington Department of Financial Institutions (dfi.wa.gov/homeownership/buy-home) offer homebuying classes, tips, and resources.
- Your home choice is very personal. Consider writing a wish list including must-haves and nice-to-haves to guide your search.
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Please contact us at 206.217.2583 or info@arrivity.com if we can assist you or someone you know with financial planning.
The foregoing content reflects the opinions of Liz Behlke and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.