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How Can I Best Prepare for the Home Buying Process?

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6 Old School Investment Strategies That Are Still Great for the Present Day

March 27, 2022

Many Americans build a large portion of their lifetime wealth through home ownership. In fact, for the average household, home equity can make up 50-70% of net wealth (Brookings Institution). With a sizeable down payment, standard 30-year mortgage terms, and on-going upkeep, home ownership is a meaningful financial commitment.

Here are a few tips to consider before you start visiting open houses - especially if you are pursuing home ownership with a partner or spouse.

Establish your max budget - really!

  • Make sure your total mortgage, taxes and insurance don't make up more than 28% of your gross monthly income. For example, if your household income is $20,000/month then your payment should be no more than $5,600 max.
  • If you can't put down 20% of the purchase price, consider holding off until you can, or consider a lower cost property.

Align on your "must haves" ahead of time

  • Make a list of things you want in a property (like a garage or a backyard) and - here's the important part - rank them in order of priority.
  • Purchasing with a partner? Independently list your top 10 things then compare and discuss why you ranked one feature over another.
  • Use the findings from the exercise to help you communicate to your realtor what's most important and help narrow down properties.

Find a realtor you trust and let him/her do their job

  • Trust the professional. A good realtor will guide you along the way and help you understand market competition and value.
  • Tour some homes live with a realtor. Seeing several homes will help you realize what you do and don't like so you can make an informed decision.

Purchasing a home is a large financial decision but can also be an emotional process. Staying organized and putting in a little work ahead of time will help you find that right fit both financially and emotionally.

Source:

https://www.brookings.edu/research/rethinking-homeownership-incentives-to-improve-household-financial-security-and-shrink-the-racial-wealth-gap/#: :text=For%20households%20in%20the%20three,net%20wealth%20(Figure%201).

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About the author

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Brandon Hayes

Vice President, Private CFO®

In 2011 Brandon opted to forego a long-term career in corporate America to join oXYGen Financial because he was impressed by the vision of creating a premier independent financial services firm, which strives to provide unbiased advice to the X & Y Generations.

A native of Westlake, Ohio, Brandon currently lives in Atlanta with his wife Aly, daughter Maryn, and their black lab Pepper. He's the youngest of three children and played soccer through college at Elon University. He's an avid runner and enjoys cheering for Cleveland sports teams despite some pretty rough years.

Credentials/Certifications:
CERTIFIED FINANCIAL PLANNER™ and MBA from Georgia State University in Entrepreneurship. Brandon holds his Series 7 (General Securities Representative), 63, Series 65 (Investment Advisors Law) and Georgia Life, Health and Variable Insurance licenses.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation.

Background and qualification information is available at FINRA's BrokerCheck website.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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