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What to Look for When Buying Your First Home

First-time home buying is exciting but also stressful.

First-time home buying is exciting but also stressful.

Buying your first home is an exciting new chapter in your life, whether you are tackling it as a bachelor (or bachelorette) or with your soon-to-be wife (or husband).

It can be fun daydreaming about designing your new home, but one of the biggest mistakes you can make is putting the cart before the horse. First-time home buyers have the tendency to house hunt first and prepare later. Avoid this mistake, which can cost you time and money, by following these guidelines before buying your first house:

  • Check your credit report and score. Don’t even bother reviewing all those online listings until you know whether or not your credit can handle buying a home. Even if your credit can handle it, you want to have a strong enough financial background that you will be able to get a lower interest rate on your loan. It is recommended to review this at least six months before the shopping process so that you can spend some time improving it.
  • Know what you need, and prioritize. There is a difference between needs and wants, and when going into a large purchase like this, you may have to make some sacrifices of what you want for what you need. Factors such as the neighborhood, school district and location should all make your checklist. Basing your home buying decision on looks and layout alone may leave you feeling regretful.
  • Know what you can afford. Getting your finances in order and knowing what you can afford each month for your new house will be imperative to avoiding future issues. Often, there are hidden costs that are forgotten once those papers are signed such as taxes, insurance, maintenance and so on. It is safer to over-estimate your monthly payments to ensure you are fully financially prepared. Another good home-buying practice is getting an idea of what your down payment will be. This venture is all about being as prepared as possible for all costs.
  • Get pre-approved. Once you know your credit score, it’s time to see how much you are able to borrow. Sellers want to know this number, and it’s important for you to realize your spending range as well. Getting pre-qualified for a loan will help to save you time and energy as you begin the process.
  • Find the best real estate agent for you. Buying your first home is no joke, so you should spend some time finding the right real estate agent for your needs, budgets and goals. Talk to co-workers, friends and families for referrals to try to find that person you feel like you can already trust. Take some time to shop around for a real estate agent as you shop around for your home. You may want to even look into hiring a realtor to take your search one step further and ensure that credibility.
  • Consider educational seminars or consulting. The best way to make sure you are making a wise home-buying decision is to know your stuff. Research, know what you are signing off to and keep yourself educated on the process. You may want to look into one-day seminars offered by real estate companies or even consulting with a mortgage lender to really grasp what to expect.
  • Get a home inspection. Last but certainly not least, get that home inspected. You definitely do not want to make such a large purchase without knowing what is beneath those walls. Issues within the home can be fixed prior to you taking over, which will be a huge relief off your shoulders. Just be aware of all the additional expenses in maintenance that would become your responsibility upon ownership.

Don’t be afraid to ask for help as you begin the home buying process. The more you understand, the better the chances are that you will set yourself up for financial success with your new home.

 

4 Ways To Improve Your Net Worth

net worth

Your net worth can be easier to improve than you think.

Do you know your net worth?

Knowing your net worth may not seem like an important detail to know, but being aware of this piece of information helps to keep you on track with your finances and monetary goals.

So, how do you determine your net worth and what is it? Basically, your net worth is the value of your assets (bonds, savings and retirement accounts included) subtracted from your liabilities (or debts). Calculating your liabilities is fairly easy, considering is it the total amount you owe including any loans, mortgages, and the like. Assets, on the other hand, can be a little trickier to establish due to debates many have in the industry about whether or not certain items, like your home or car, are actually considered an asset due to their depreciation over time as well as costs going in for maintenance. Assets should put money in your pocket, not take it out; however, for the sake of argument, let’s say your vehicle counts toward your overall net worth.

So, if your total assets are more in value than your liabilities, you have a positive net worth. If the value of your assets are less, then your net worth is negative. Throughout your life, your net worth will fluctuate. The goal, though, is to create a steady trend up to increase your assets, decrease your debts and, therefore, enhance your net worth.

If this stresses you out and it feels like you will never have less liabilities than assets, fear not. There are many ways you can improve your net worth. Here are a few:

    1. Increase your income. Easier said than done, right? But with the growing digital age, there are many ways you can make money online simply by being on your computer. If getting a higher paying job isn’t an option for you right now, look into blogging or selling items on Ebay or Esty. These are great ways to make some extra money each month, with little costs in overhead. Plus, you can use this side business for write-offs in the home on your taxes.
    2. Pay more money toward your debt. Any chance you have to pay more money toward your debt you should take. If you are only paying the minimum payment each month credit cards, student loans, etc., adjust your budget to try to include higher payments toward this debt. For instance, you may find that over the course of a month you are spending $30 or more on just going out for coffee. Cut back on those coffee shops and use that money toward your liabilities instead. Every penny counts, and your net worth will thank you.
    3. Save a quarter of your income. If you want to increase your net worth at a faster rate, saving more will help you do this. While a common recommended amount to save is 10% of your income, 25% will give your net worth percentage the extra oomph it needs. If this seems like a lot, consider taking 10% of one paycheck and 15% of another and use that total toward either a savings account, a retirement fund or something similar.
    4. Create a passive income. They say time is money, and the less time you have to spend actually making money while simultaneously increasing your bank account, the better for your net worth. There are a few routes you can take to create a passive income. Affiliate marketing is an option (if done ethically and correctly), but you can also invest in stock and bonds. Index funds, Guaranteed Investment Contracts (GICs), dividend stocks and bonds are examples of opportunities for you to make more money through income-generating assets. If you’ve never invested in stocks, you will want to consult with a professional first.

Finally, a great book on this subject is The Millionaire Next Door. The authors are a couple of marketing professors by the names of Thomas J. Stanley and William D. Danko. Their book is groundbreaking because it takes a realistic look at how America’s rich got that way. What they found was that millionaires were self-employed or owned boring profitable businesses. They also famously found that millionaires made decisions based cumulative future value (for example, saving money over your lifetime by not smoking) and took aggressive advantage of tax-deferred investing strategies. If you are serious about increasing your net worth, buy, read and re-read this book.

You won’t increase your net worth over night, but you can take continuous steps to improve it so that you can reach your financial milestones much faster.

 

Under New Management

Welcome to Suburban Finance! If you’ve been here before, you may notice that things have changed slightly as this website is under new management of District Media Finance LLC.

District Media Finance LLC is a family owned personal finance blogging business, ranging from basic to more advanced finances. We are dedicated to educating, encouraging and inspiring our readers to reach their greatest potential by improving their finances and ultimately living their dreams. We believe that anyone can take control of their finances, live authentically and freely in their relationship with money and ultimately create more good in the world.

We plan to continue on what Suburban Finance offers to readers, as a personal finance blog however be on the lookout for some exciting and good changes in the following months.