Profile picture for femgiz22

Should we seek out a financial advisor before buying a home...

I am fairly good with managing our family budget and working towards goals, etc. However, we are seriously considering purchasing a town home or SFH and I have my reservations.  We have serious debt amounts that can in no way can get paid off rapidly, we have paid off all our cc debt though which is great.

Renting is fairly expensive in our area, the min. possible would be around 1100 a month, but tends to be in the 1300-1400 range.  

We are now trying to decide if and when we should buy, and how much mortgage is too much of a mortgage.

We have a gift for a downpayment, and make fairly good yearly salaries, but again I am concerned about the long-term costs of home ownership--would it be wise to seek out a financial advisor to discuss our financial plans? Will they simply tell us to save more money and pay off debt? How can they help in the process?  
  • February 20 2014 - US
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Answers (6)

I have no idea what a "financial advisor" will tell you, but if you have "serious" debt already, then you may very well not qualify for a mortgage, any way.

All the best,
  • February 20 2014
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If you are not able to create and honestly evaluate your budget to determine what you can comfortably afford, then you would be well served to seek advice from a Financial Advisor.  

As part of the mortgage process, we will review your monthly debts (minimum debt servicing) and weigh that against your income as part of the approval process.  However, this is just one aspect of affordabilty, as we do not have an intimate knowledge of your discretionary income, long term goals and, most importantly,what types of deferred maintenance expenses may be incurred on a specific property.  In my experience, the latter is the most important part in determining the financial prudence of the purchase and the area that most buyers seriously underestimate.  For example, I am currently working with first-time buyers, with little in reserves, that consider a lower priced fixer-upper as a better value that a higher priced home that has less deferred maintenance expenses.  While that may be true for someone with larger reserves, this is something that should carefully be evaluated for someone with your profile.  To put this all together, you will need a good team - loan officer, advisor and real estate agent - working for you to help ensure there are no financial suprises. 

If you are looking to Purchase in New England, please feel welcome to send me a message to discuss thsi further. 

Hope this helps.
  • February 20 2014
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Profile picture for femgiz22
Thanks for the replies.  I do know what our max. purchase price would be that I am comfortable with.  I would prefer 200k and under.  I suppose my problem lies in deciding how much home to purchase, there are townhouses in the 135k range close by, however, my spouse wants a SFH, which puts us closer to our max amount, and I would like to make sure we still have income for emergencies, purchases, retirement, etc.  
  • February 20 2014
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A good financial planner is also going to advise you that buying a home can also be a smart long-term investment in comparison to renting.  Have you talked to a mortgage lender to see what you are pre-qualified to purchase AND to determine what price range puts the payment in a good comfort range for you?  Make sure you also take into account the long-tem bonus of owning versus renting... the accumulating equity that you will have in the home!  If you pay $1400 a month for a mortgage, $1000 of that might be going towards paying down the principal (i.e. money that you are paying to yourself).  That is $12,000 a year you are essentially paying yourself.  If you pay $1400 a month in rent that is all going out the window.  You won't see a penny of that back later.  There are always ongoing maintenance issues that go along with owning a home... but there are also long-term payoffs down the road in addition to pride of ownership.  Make sure you buy a solid home (so you will hopefully have minimal repair issues), get good coverage on home owners insurance (so that IF there is a big issue you are minimal out of pocket) and consider getting a home warranty to help your budget for other maintenance issues.  It sounds like you have your ducks in a row and can probably weigh the pros/cons on your own, but if it makes you feel better you should absolutely consult with a reputable financial planner.  Good luck!!!

  • February 20 2014
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What state are you looking to buy in? One of the duties I do as a loan officer is to take a look at your credit and current financial situation and come up with a game plan that we both feel would be benficial to you and your family in the short and long term scheme of things.

Feel free to message me and we can put our heads together and see what options would work best for you!

Best wishes!
Scott

  • February 20 2014
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Profile picture for Outer Banks N C
I don't think a financial adviser is what you need. Buying a TH is pretty straight forward, you will have a good idea of your costs like mortgage, electric, tv/internet, water, etc because you can always ask neighbors or the sellers to get an idea what they were paying. The HOA fee is known to you so unless there is the totally unexpected a small savings should cover most anything that pops up from owning the TH. It sounds like you are more nervous about buying and the uncertainty since it is new to you. It's really not as bad as you want to think. Buying now is a good thing because rates are so crazy low and prices are down. Just make sure the TH is not going to be outgrown too soon.

Go for it.
  • February 20 2014
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