FIRST TIME HOMEBUYER? – Things to Consider Before Taking that Leap

FIRST TIME HOMEBUYER? – Things to Consider Before Taking that Leap
May 1, 2023

Life is full of many exciting firsts. Your first steps, your first car, your first love, your first job, and now
your first home! You’ve made it to what most would call “living the American dream,” but now what?
Since buying a home will likely be one of the largest financial investments you’ll make in your lifetime,
there are several things you need to consider before making that leap:

1. Decide what you want out of a home
When figuring out what type of home you want today, plan for the future as well. You don’t want to
buy a one-bedroom apartment if you plan on having kids in the next couple of years. That could get
crowded quickly! Write a list of things you must have versus things that you would like to have.
Important things to think about are location and/or school district (you can always change the home
but you can’t change those two things). Once you have an idea of what you want, start researching
homes for sale that match your criteria. Remember that you’ll probably never find a home that checks
off all the boxes, but you want it to check off the most important ones!

2. Get that credit score up
A good credit score (north of 700) could save you hundreds of dollars on your monthly mortgage
payment. It is one of the most important factors lenders review when determining if they’ll approve
you for a loan, what amount they’ll approve you at, and the interest rate they’re willing to give you.

3. Make sure you’re pre-approved by a lender before looking
Nothing is worse then finding that perfect home and watching someone else buy it! If you want to get
an offer accepted on a home, it’s important to receive preapproval from a lender prior to looking. This
will show the seller that your finances are stable and you can afford the home.

4. Buy what you can afford – not what you’re approved for
The last thing you want is to buy your dream house and not be able to afford to do anything else!
During the pre-approval process, you’ll likely get approved for a loan that is far greater than you could
comfortably afford. This is why it is important to KNOW YOUR BUDGET! When deciding how much you
can afford it’s important to take into consideration all the expenses related to a home purchase
(mortgage payment, property taxes, homeowner’s insurance, and homeowner’s association (HOA)
fees (if applicable).

5. Be aware of ALL initial costs involved in buying a home
You want me to pay what?! Before buying home, make sure that you have enough funds saved to pay
for the following:

• Earnest Money (aka good faith deposit) – the amount of money you have to fork up as soon as
your offer is accepted (usually 1-3% of purchase price, a portion of your down payment)
• Down Payment – Percentage home price you pay at closing (usually 3-20% of purchase price
depending on situation)
• Closing Costs – Yes there are fees that you must pay at settlement (inspection costs, title
insurance, etc.). In addition, if you want to pay your property taxes and insurance through
your escrow account, you’ll be required to pre-pay 4-6 months of these expenses at closing.
• Additional Furniture – You know you’ll want to get new stuff
• Home Improvements – You might want some of these done day one!

6. Play shop until you drop for a good, experienced realtor
Buying a new home is a very stressful process. It’s important to have a knowledgeable, experienced,
available, and passionate person in your corner fighting for you.

7. DON’T BE AFRAID TO NEGOTIATE! (examples: purchase price, interest rates, realtor fees [if
selling])

As always, please reach out to your trusted advisor with any questions.

Amber Kodad, CFP®, MBA

Vice President of Financial Planning/Advisor Resource Center

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through WCG Wealth
Advisors, a registered investment advisor. WCG Wealth Advisors and The Wealth Consulting Group are separate
entities from LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific
advice or recommendations for any individual.

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