November 15, 2021
Everyone knows that buying a home, especially for the first time, is a big decision. Making this decision is even harder now during a hot housing market that is untamed by the pandemic, according to Andrew Osterland, business writer for CNBC. Osterland explains that interest rates are at historic lows, and there is a supply shortage despite high demand. Further, financial advisers say that this may be the worst time ever for homebuyers, so they should wait or be cautious. So, here are some tips from Cheryl Garrett, certified financial planner and founder of Garrett Planning Network, and Rick Kahler, founder of Kahler Financial Group:
- Do not spend more than you can afford. Set boundaries and stick to them. Kahler says, “I see people overspending by $400 to $500 per month to get what they want.”
- Keep monthly housing costs, which includes taxes, insurance, and expected maintenance, at a manageable percentage of your income. Kahler likes 25% of income as a limit.
- You should hire a fiduciary as your agent, but not one who serves both sides of the transaction. Since real estate transactions can happen quickly, “you need someone to reach out to for a reality check when counteroffers come up,” suggests Kahler.
- You must make sure that you want to live in the home and neighborhood for an extended period. A renter can easily pack up and move, but “if you own the house, you could be stuck in it for months or years,” warns Garrett.
Here are additional tips from Stephanie Ruhle, NBC senior business correspondent:
- Look for homes that are under your budget, so you can offer above the asking price. But do not forget about closing costs too. “That can add a couple thousand dollars to the bill,” says Ruhle.
- Figure out how much you can realistically spend on a home. Ruhle explains that some may be going from renting to buying, so there may be a lot of costs that they are not used to, “such as taxes, maintenance, and homeowner’s insurance, to name a few.”
- If you do not have enough money for a down payment, there are down payment assistance programs that can help first-time homebuyers receive grants and low-interest loans.
Nina Nguyen // CIRB Journalism Intern