Four Ways Buying a Home Will Change your Financial Life
Buying a home can improve your quality of life and build financial security for your family that can last generations. However, it’s a major financial commitment that requires careful planning and preparation.
“Buying a home can seem intimidating to the first-time buyer, but the rewards are undeniable. It’s an investment in your life, and your family,” said Scott Kim, Director of Portfolio and Lending Operations at HomeSight.
As you consider buying a home, know upfront this decision will transform your financial life, in ways that are undoubtedly beneficial—but also in ways that will be tough. And, like most things worth pursuing, you have to go through the tough parts to get to the beneficial parts. Here are the ways buying your first home will change your financial life:
1. You’ll get to know your budget on a more intimate level.
Depending on the type of mortgage for which you qualify, you may need to put down anywhere from three to 20 percent of the purchase price of the home. This means you will have to set aside money every month and reduce expenses until you reach your goal.
The down payment is just one of the new expenses you’ll be facing as a homebuyer. You’ll also need to plan for short-term expenses such as closing costs, and long-term expenses such as your mortgage, maintenance, repairs, property taxes and insurance.
To get started, you’ll need do a deep dive into your budget and find out exactly where your money is going and where you can save. It might be tough to whittle down the number of streaming services you subscribe to, but it’s good to take an honest look at your needs and habits. Have you really been watching Max since the Game of Thrones sequel ended?
2. You’ll create a new financial roadmap.
If you’ve been renting, your budget probably hasn’t contained expenses for lawn care, pest control, painting and cleaning, or unexpected repairs such as plumbing leaks, roof damage or appliance breakdowns. If you’ve never had these expenses before, they can be tough to estimate. To create line items for these – as well as for other expenses such as property taxes and insurance – you’ll need an all-new budget.
Fortunately, the homeownership team at HomeSight has expertise in advising first-time homebuyers and can help you estimate your new costs, creating a budget with you that works for your family and helps you save enough to meet your goals.
3. You’ll build equity in your home.
What’s equity? It’s the difference between what your home is worth and what you owe on your mortgage. As you pay off your mortgage over time, your equity will increase. When you’re renting, you’re paying for living expenses and you’ll never see that money again. With a mortgage, you’re paying for living expenses, and most of that money remains yours. This means …
4. You’ll have options in the future.
Ultimately, buying a home will transform your financial life and open options you wouldn’t have without home equity. You can use your equity to borrow money for home improvements, education, debt consolidation and other purposes. You can also sell your home and use the proceeds to buy another one, or to fund your retirement.
It’s true you’ll need to jump the initial financial hurdles of home ownership to reach the benefits. But if you’re considering taking the first step down the path to homeownership, remember you don’t have to take this journey alone. Consult with trusted community professionals who are committed to helping you along the way. Homebuying will create new financial realities, but you don’t have to navigate them alone.