When it comes to buying a home now, there are many challenges.
But homeownership can be a great way to build wealth and maintain home stability, said Kamila Elliott, board-certified financial planner and co-founder and CEO of Collective Wealth Partnersa boutique consulting firm in Atlanta.
Achieving that goal now can be challenging as house prices are still high and higher interest rates are driving up mortgage costs, said Elliott, who is a member of CNBC’s Financial Advisor Council.
“If you’re planning on staying in the area for five years, you like the house and you’ve created a budget to really estimate all the costs of the homeownership, I still think it’s a good idea to buy one now to buy a house,” Elliott said.
There are tips Elliott shares with her clients that can help other potential homebuyers achieve this great goal.
1. Prepare for monthly house payments in advance
One of the ways to be in the best financial position to buy a home is to save, Elliott said.
And that goes beyond the mere down payment.
A prospective buyer stops by to view a home for sale during an open house in Parkland, Florida May 25, 2021.
Carline Jean | Tribune News Service | Getty Images
For example, if you pay $2,000 a month in rent and spend $3,000 a month after buying a house, try to put an extra $1,000 a month aside so it’s no surprise the cost of to take over a new house you.
You should also work on improving your credit score so you’re in the best position to get a good interest rate on your mortgage, Elliott said. That means reducing your credit card usage, keeping track of your spending and, if necessary, glancing at your credit report to correct any inaccuracies.
One of the benefits of buying a home over renting is the ability to have fixed costs, Elliott said. But homeowners can still expect surprises, she said.
With many cities raising property taxes, prospective homeowners should expect these costs to increase.
In addition, you should expect to pay for landscaping, furnishings and unexpected emergencies such as a burst pipe.
Make sure you have enough liquidity as a homeowner to handle these extra costs, Elliot said.
Even though real estate prices and interest rates are high, there are still ways for potential homebuyers to cut costs.
By taking out a shorter-term mortgage — say, 15 years instead of 30 — borrowers can access lower interest rates.
Potential lower-income buyers should check their city or county websites for homeownership or down payment assistance programs.
As incentives to buy a home increase again, such as closing costs, it’s important to ask if there are any opportunities to lower the overall price of the home at this point, Elliott said.
https://www.cnbc.com/2023/06/07/these-3-tips-can-make-purchasing-a-home-more-doable-advisor-says.html These three tips can make buying a home easier, the advisor says