Buying a home is a big responsibility and can be a life changing event. Whether you’re buying your first home or your forever home you need to really think about whether you’re financially prepared. Deciding to buy a home when you aren’t prepared for the financial consequences could result in struggling to pay your expenses.

Financially Prepared

Getting started in the home buying process should begin with a full review of your current finances. You want to first consider your current debt and make sure that you can handle the additional expenses. If you’re a first time home buyer, don’t forget about the taxes, utilities, insurance and miscellaneous expenses that are in addition to your mortgage payment. Secondly you want to have a budget set up if you already don’t. You should definitely have one prepared before beginning the process of looking for a home. If after going through your finances you feel that you’re not ready, it’s okay. Renting isn’t a bad thing for a short period of time. You will just need to find other ways to reduce your expenses so you can save more for a future home purchase.

Selecting a Mortgage

Getting past the first step of becoming financially prepared is a big step. Now you should have a good idea of what type of mortgage you’re looking for and where to look. Take your time and be selective in your process to get a mortgage. Talk with mortgage brokers and/or credit unions to make sure you are getting a mortgage that best fits your needs. If it’s an option for you, I recommend you put 20% down while getting the shortest duration, which is normally 15 years. Getting the average 30 year mortgage will reduce your monthly expenses but you will pay for your house more than twice in the end.

Saving for the Future Home

Planning for a future move and knowing you have some time to save is the best spot to be in. There are many options to help you decide how to best save but it depends on your time range. If you’re looking short term (1-3 years) your best bet is putting the money in the bank. You’re so close and you don’t want to risk losing the money you’ve already saved up. Now if you’re looking long term (3-5+ years) you can begin to explore lower risk, more conservative investments. These may help get you a better rate than the bank but won’t keep you up at night stressing. To learn more about becoming financially prepared to buy a home, listen to my interview with Clay Moden on 106.5FM WYRK.

WEEKLY SEGMENT ON WYRK

You can catch our weekly Plan.Protect.Invest. segment live on WYRK 106.5FM at 7:20am every Wednesday. Each week we will have a Sgroi Financial planner on with Clay Moden and the WYRK morning show to discuss financial topics to educate and help their listeners. Since 1971, Sgroi Financial has proudly served Buffalo, NY and the Western New York community from our West Seneca location.