Blog posted On June 08, 2023
The current market offers plenty of challenges for hopeful homeowners and would-be buyers. Higher rates, steep prices, and few options on the market are making affordability a seemingly insurmountable hurdle. But according to wealth expert, CFP, and CEO of Collective Wealth Partners, Kamila Elliot, “buying a home right now is a good idea.” Before you do, there are three boxes you’ll want to check off, according to Elliot.
“If you plan on being in the area for five years, you love the home, and you’ve done a budget to really assess all the costs of homeownership, I do still believe buying a home right now is a good idea,” Elliott said. For most, the first two on the list are an easy ‘yes.’ The last one is where many buyers might have a harder time. To help guide clients on their budget and financial preparation, Elliot offers three tips.
It might go without saying that one of the best ways to prepare for your purchase is to save. There are many ways you can speed up saving for a down payment. But ‘saving’ goes beyond preparing for the upfront costs of a purchase. For example, if you know that your future monthly mortgage payment will be around $3,000 and you’re currently paying $2,000, you should start trying to save an extra $1,000 a month now. This way, you can adjust your spending and saving habits before taking on the mortgage. Another way you can prepare for your monthly payment is by improving your credit score. Credit is a huge factor in determining your future rate.
We know certain costs are called ‘unexpected’ for a reason. You can’t plan or prepare for when they decide to hit you. But there are certain home costs you can almost always expect at some point during your mortgage. Maintenance costs, increased property taxes or insurance, landscaping, or emergencies like burst pipes are all examples. If you have an emergency fund established, great! If not, it could be smart to start one, or to explore home financing options that can keep your cash liquid.
Aside from exploring liquid options like lines of credit and the All In One Loanä, you can also explore ways that can help you potentially get a better rate or smaller mortgage payment. For example, 15-year terms can occasionally offer more favorable rates than the typical 30-year loan. However, this would mean your monthly payment would be slightly higher. Adjustable-rate mortgages (ARMs) can also offer better rates than the typical fixed-rate loan at times. Other options like buying discount points, exploring payment buydowns, or asking for seller concessions could help.
Some of these payments-friendly options may depend on the market conditions, so if you’re curious about if you could save on your mortgage payment, let us know.