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Working with your financial advisor to buy a home successfully

Buying a home can be an overwhelming prospect, but it doesn’t have to be. If you work with your financial advisor, they’ll help you every step of the way to make sure you buy the right home at the right price. Here are 11 tips to keep in mind when working with your advisor:

1. Know your credit score. The easiest way to do this is by joining one of the credit monitoring agencies, like Experian. Log in and get them to start tracking your credit score so you know where you stand from day one.

2. Shop for lenders. Not enough people do this. Interest rates are low and there are a lot of good options out there, so don’t just hire the first lender you find. Your advisor should be able to help you find plenty of great ones.

3. Know your expenses. Many expenses go into a home purchase (insurance costs, repair costs, etc.), so don’t just look at the purchase price. Examine all of the various expenses, organize them into an Excel spreadsheet, and think them through before you pull the trigger.

4. Know what you want. Do you want a single-level house? How about a big yard? Have clearly defined goals in terms of what you want in your house. There are so many types of homes out there, and you don’t want to get swayed by something that has the right price but isn’t quite right for you.

5. Understand the value of what you’re buying. We’re fortunate in this day and age to have many online real estate resources (Zillow, Realtor.com, etc.) that can give you not only a price estimate of a home but also what it’s traded for in the past. Take advantage of these resources so you can do your due diligence, see what the previous owner purchased the home for, and buy it at the right price.

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6. Know what you’re comfortable paying. This ties in with point No. 3. You need to know what you’re willing to spend because you don’t want to be a slave to your home and overwork yourself just to be able to afford it. You want to be able to enjoy your home and add value to your lifestyle after you buy it.

7. Find a reputable home inspector. I can’t tell you how many horror stories we’ve heard from people who hired cut-rate inspectors who didn’t know what they were doing. You may have to pay extra to find a reputable home inspector who can find all the home issues you should be aware of, but this will save you a lot of money down the road by avoiding future problems. As with lenders, your financial advisor should be able to help you find some great home inspectors. Don’t find the least-expensive inspector—find the best one.

8. Understand the associated charges of homeownership. In certain communities, for example, you’ll have to pay HOA fees (homeowners association fees). These can cost anywhere from $100 per year to $300 per month. In any case, these charges will add to your bottom line, so talk to your advisor about them and hone in on all the key details. Don’t let your monthly budget get out of hand due to HOA fees. Speaking of budgeting…

9. Plan for your furniture. What will your furniture cost once you move into the home? Will you need to prepare for extra rooms? How much will an extra mattress or table cost you? Get out there and price these items, because they can be really expensive. We recommend cataloging your furniture in the same Excel spreadsheet you use to understand your other home buying expenses.

10. Consider any home repairs that need to be made. Also, don’t let them scare you—it may not be as expensive as you think to replace your home’s carpet or change the wall colors. Don’t pass up a house that’s within your budget just because it needs some minor repairs.

11. Know the potential growth of your investment. Buying a home can make you money both short-term and long-term. It all depends on how you buy it. Understand your home’s entry price and what other homes in the neighborhood are selling for so you know whether you’re buying at a discount or getting a relative value for it. Then, decide the best use of your capital.

Once you’ve done all this due diligence, you’ll have done all the work you need to buy a home confidently and successfully. If you have any other questions about this topic, don’t hesitate to reach out to us. We’d love to speak with you.

If you have any more questions about this initiative, your specific tax situation, or whether a donor-advised fund is right for you, give us a call and we’d be happy to help you.

Are you looking for an Arizona wealth management firm to provide personalized investment management? If so, contact the wealth advisors at Henry+Horne Wealth Management.

 

Michael Carlin, AIF®