Ready to Buy a Home? Let’s Talk Money! (And Why You Shouldn’t Wait)
Thinking about buying a home in the next 12 to 18 months? You’re not alone if you’re feeling a little overwhelmed. With interest rates, home prices, and the general state of the market, it’s easy to get discouraged. Today, I’m joined by Cortney Kaveh, a money coach, to break down the financial side of home buying and why it’s often better to act sooner rather than later.
Why Delaying Homeownership Can Cost You
Here’s the thing: homes generally appreciate in value. Historically, we’ve seen an average of 6-8% annual appreciation, and even in more moderate markets, it’s typically around 3-5%. That means a $500,000 home today could be worth $550,000 in just a few years.
As Cortney explained, delaying your purchase isn’t just about missing out on potential wealth building; it’s also about your quality of life. Plus, with rising rent payments, owning your own home becomes even more appealing.
What Does it Actually Take to Buy a Home?
Let’s talk numbers. The biggest upfront cost is your down payment, usually 3-5% of the home’s price. For a $500,000 home, that’s $15,000 to $25,000. Then, you’ll need to factor in closing costs, which are typically 2-3%. So you’re looking at a total upfront cost of $25,000 to $35,000.
Monthly Payments, including principal, interest, property taxes, and insurance, can range from $3,000 to $3,700 for homes in the $430,000 to $500,000 range.
Those numbers might seem daunting, but here’s the good news:
Lenders Are There to Help: Don't be afraid to talk to a lender early in the process. They can help you understand what you qualify for and what steps you need to take.
Seller Credits and Mortgage Buydowns: These options can help reduce your closing costs or lower your monthly payments. In today's market, we've seen many buyers successfully negotiate these benefits.
Debt-to-Income Ratio (DTI): Lenders use this to determine how much you can afford. Ideally, your total debt (including car loans, student loans, etc.) should be no more than 45% of your income.
Getting Your Finances in Order: Cortney’s Tips
Budget, Budget, Budget: It’s essential. Create a zero-based budget, where every dollar has a job. Track your spending throughout the month to stay on top of your finances.
Simulate a Mortgage Payment: If you’re currently renting, pretend you're already paying a mortgage. For example, if your rent is $2,200, but your potential mortgage is $3,000, save the extra $800 each month. This not only prepares you for the higher payment but also helps you build your down payment fund.
Automate Your Savings: Set up automatic weekly transfers to your savings account. This makes it easier to save consistently without being tempted to spend the money.
Credit Management: Talk to a lender about your credit. Consider raising your credit limit, as long as you’re paying on time, as this can improve your credit score.
Don’t Bury Your Head in the Sand!
The key takeaway is: don’t let fear or uncertainty prevent you from pursuing your homeownership goals. Reach out to a lender, a money coach like Cortney, or our team. We’re here to answer your questions and guide you through the process.
Ready to Take the Next Step?
If you’re thinking of buying a home in the Newberg area, we’re here to help! Don’t forget to watch the full YouTube video for even more insights!
We’re looking forward to helping you achieve your homeownership goals!