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National Financial Planning Month: Your Guide to Homeownership

October is more than just pumpkin spice lattes and spooktacular activities; it’s also National Financial Planning Month. This month provides an opportune moment to assess, strategize, and prepare to achieve one’s life goals, and for many, one of life’s most significant goals is buying a house.

At the Mike Brown Group, we understand that homeownership is a journey that begins long before the actual purchase of a home. Whether you are looking for your first home or a vacation home, we encourage you to embrace the spirit of financial planning as we walk you through the steps of building a strong financial foundation.

1. Financial Literacy:

Understanding the nuances of loans, interest rates, and mortgage options is crucial when entering the real estate market. When you financially educate yourself, you will be able to make informed decisions.

2. Set Clear Financial Goals:

Start by defining what homeownership means to you. Are you looking for a starter home, an investment property, or perhaps your forever home? Your answer will guide your budgeting and saving tactics. Decide on a tentative timeline for your purchase, and establish monthly saving goals.

3. Understand Your Credit Score:

Your credit score plays a pivotal role in determining the interest rates you’ll receive on a mortgage. Obtain a copy of your credit report, review it for any inaccuracies, and work on improving your score if necessary. Paying off outstanding debts, ensuring timely bill payments, and not opening new credit accounts can help boost your score. If you are on the search for a new home, consult with a lender on what is optimal for your financial situation.

4. Budget Beyond the Purchase Price:

When calculating potential homeownership costs, remember to include property taxes, homeowner’s insurance, utility costs, and potential homeowner association fees. Additionally, you will want to set aside money for a down payment and closing costs, which can typically range from 2% to 5% of the loan amount.

5. Explore Mortgage Options:

There are multiple mortgage options available, from conventional loans to government-backed options like FHA and VA loans. Research each to understand down payment requirements, interest rates, and any associated fees. This is also a good time to get pre-approved, as it gives you a clearer picture of what you can afford and shows sellers you’re a serious buyer. Reach out to a lender like the Mike Brown Group’s preferred lender, Movement Mortgage, and learn more about what loan options you qualify for or work best for you!

6. Establish an Emergency Fund:

Homeownership comes with its set of unforeseen expenses. Maybe the water heater breaks, or the roof needs repairs sooner than anticipated. Having an emergency fund ensures you’re not caught off guard. A good rule of thumb is to have three to six months’ worth of expenses saved.

7. Collaborate with a Financial Planner:

While you might have a good grasp of your financial situation, professional guidance can be invaluable. Financial planners can offer insights into tax benefits, investment strategies related to real estate, and more nuanced budgeting advice tailored to your personal situation.

8. Revisit and Adjust:

Financial planning isn’t a one-time event. As National Financial Planning Month comes to an end, set reminders to revisit your financial plans quarterly or semi-annually. Adjust your strategies based on any changes in income, expenses, or personal circumstances.

9. Stay Informed:

The real estate market, interest rates, and economic conditions are continually evolving. Stay updated with market trends and adjust your financial strategies accordingly. Remember, knowledge is power, especially when it comes to major financial decisions and trying to position yourself for the elusive sweet spot.

While buying a house is undoubtedly an exciting venture, it’s  important to approach it with a clear financial strategy. Although National Financial Planning Month offers a timely reminder of the importance of being financially prepared, whenever you are ready to start your home-buying journey, we at the Mike Brown Group are here to help you!

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