While low mortgage rates might be tempting, keep these questions in mind
Trish Goska //September 10, 2020//
While low mortgage rates might be tempting, keep these questions in mind
Trish Goska //September 10, 2020//
This year has become a time for many to take stock–including when it comes to finances.
While some are reprioritizing savings goals or discovering new ways to grow their business, others are considering making the leap from renter to homeowner, likely due to the significant drop in mortgage rates over the past few months.
If you’re among those considering whether home buying is right for you, before picking up the phone to call your local realtor, first consider these three questions to ensure now is the right time for you (and your wallet) to take the plunge.
Next to retirement planning, purchasing a home may be one of the largest financial investments you’ll ever make. Before jumping to take advantage of low rates, first examine how stable your finances are before adding on the responsibility of owning a home.
Is your industry or position prone to change based on economic conditions? Given challenges caused by the current health crisis, if the answer to this question is yes, it may be better to hold off for the time being. You’ll also want to take a look at your other financial goals and responsibilities, including your emergency fund, and general cash flow and savings.
With the unknowns associated with the pandemic, having an emergency fund – money set aside for the unexpected, such as a possible job loss or unforeseen event – is more important than ever. While the ideal number can fluctuate depending on your lifestyle, a good rule of thumb is setting aside three to six months’ worth of expenses, or even between nine to 12 months if these savings will extend to other members of your family. Having this built up prior to purchasing a home can help to provide a cushion in the event of any unanticipated financial changes.
It’s important to remember that budgeting for a home goes beyond simply your monthly mortgage payment. You’ll likely be responsible for items that, as a renter, you didn’t need to build into your budget. And, if your wallet already feels tight, waiting could be the right decision.
A few of these costs to keep in mind include:
Another important budget consideration? Making sure you’re committing to a housing payment you’re able to afford. Many people get pre-approved for a higher mortgage than is comfortable within their current budget, and sitting down with a mortgage calculator and a qualified mortgage
lender can help you to better understand what price limitations are best for you and your budget. By working with a trusted mortgage lender alongside a financial advisor, you may find that you qualify for special programs such as down payment assistance and better understand what type of mortgage is best suited for your situation.
While there is no harm in browsing, you’ll want one of the biggest purchases of your life to be backed with plenty of thought and rationale. I recommend meeting with your financial advisor, a trusted mortgage lender, and real estate agent to aid in this process. Ultimately, you’ll want to ensure that this decision aligns with your other short- and long-term goals, both personally and financially.
With the uncertainty this year has brought, it’s more important than ever to have support in navigating important financial decisions. Whether you’re an empty nester looking to downsize, or a growing family in need of an upgrade, a financial advisor can support you in determining whether purchasing a home is right for you, and the steps to make that dream a reality.
Trish Goska is a financial advisor with Northwestern Mutual. Trish can be reached at 303-300-5577 or [email protected]. Website: http://patriciagoska.nm.com/