How To Hit A Financial Home Run When Buying Your First House
A couple of years ago my dad attended a Cubs game at Wrigley Field in Chicago. He and his good friend were sitting behind home plate during the game when a foul ball came over the net landing near his seat. My father picked up the ball and looked at, at which point, an old-timer of Wrigley Field struck up a conversation with him. The gentleman said to my dad, “Did you know that ball only has a 3-pitch life span?” He went on to explain that during any game, a baseball-only has an average of 3 pitches before it is out of the game. The ball could be scuffed up by a foul tip, could be a foul ball like this one, or could be a home run that takes it out of commission, but the average is only 3 pitches!
When the time comes for you to purchase your very first home, you want to be sure you make correct financial decisions. Here are “3 pitches” to help you along the journey of purchasing your first home.
1st Pitch: Just because you are approved for it doesn’t mean you should spend it.
After going through the pre-approval process and finding out how much house you can afford, it is always wise to sit down and look over your household budget. Now, I know this is not always a fun thing to do, but time and time again, I’ve met with clients who bought a home only to find out it was way too much for their budget to handle.
Remember, once you sign on the dotted line, you are on the hook for that payment, and the last thing that anyone wants to see happen is you get caught paying way more than you can afford.
Be wise and consult with your realtor to have them help you by only looking at homes that you can afford. If you still need some help deciding on your housing budget, reach out to a financial professional who you trust to help guide you on this journey.
2nd Pitch: Have an Emergency Fund.
You may have heard that owning a home is full of constant and sometimes unwelcomed surprises. The key here is you’ll want to establish an emergency fund in cash that you can easily access when those Saturday afternoon projects turn into a little more than you bargained for them to be. By setting aside some cash, you can help prevent yourself from having to break out Ol’ Mastercard or Mr. Visa to cover the costs of your DIY weekend.
I recommend setting aside at least $2,000 in a savings account at your bank as quickly as you can. Then over time, you should try to add enough money to cover 3-6 months of expenses to help cover any other unwelcomed surprises. I know for some people this sounds like a lot, but try starting out small when saving. Decide to eat at home more often to avoid the expense of going out to eat, or cut back at least one day of Starbucks, and you will get there in no time.
3rd Pitch: Pay Up to Build Equity.
After you have settled into your new home, you’ll probably feel a sense of pride and accomplishment. You sit down, look at your upcoming bills, and realize it is time to make your first mortgage payment. Now, many times a monthly mortgage payment isn’t an even number. One little thing that you could do to help build up equity in your home is to simply add a few dollars to your payment.
For example, if your monthly mortgage payment is $852, round up to the nearest ten and pay $860 to the mortgage company each month. By adding those few extra dollars, you are making small adjustments to your overall equity ownership in your new home. Remember, little things done over a long period of time can add up to make a big difference..
Buying your first home is exciting and fun, and it should be! Put these 3 pitches into practice so that you can help set yourself up for financial success and be on your way to reaching your financial goals.
Securities offered through LPL Financial, Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Hi There! My name is Nicole Nark and I am a Realtor in Central Arkansas. I have personally curated the topics found on this blog so that I can continuously provide quality and up-to-date resources for you. Ready to discuss the path to homeownership? Let’s meet and grab coffee! 501-612-3965
Thank you to Austin Evans with GenWealth Financial Advisors for providing this article. Remember to contact Austin with any questions you may have in regards to your financial goals.
Austin@getreadyforthefuture.com | 501-653-7355