Planning to Buy a House
A home purchase is likely the most expensive purchase you will make – so you’ll want to put a lot of thought into purchasing property. It is important to understand all the factors that go into buying your first house, especially where this house purchase fits into your long-term financial goals.
A dream of owning a home can quickly become a nightmare without preparation and planning. The goal is for you to own the house, you don’t want the house to own you. Many people buy what is known as a starter home – this is a house that meets their needs for the next 3-5 years. Once they have equity built in the home and feel comfortable moving into a larger home, they look for their next or dream home.
Buying a house that has more space and features than you really need right now could be expensive and cause the majority of your paycheck to go to pay the expenses of owning your new property. You also don’t want the majority of your time going to maintain the property.
Think About Current and Future Needs
You may be renting an apartment or looking to leave home for the first time, and you need to consider not only what you need for this year but also what your needs are for the future. You need to think about where you will be in the next 5-10 years as buying a home is a long-term investment.
If you are planning to start a family in the near future, then looking for a home that can accommodate your growing family is important. You might also consider being located in a school district that meets your family needs, proximity to recreational facilities, or other family-related facilities. If you are not planning on having children, then your priorities may relate more to things you enjoy doing, like golfing, biking, or other recreational activities.
House Progression
For some people, the first house they buy is the house they’ll stay in for the rest of their lives. Many others find that as their lifestyle changes, so does their need for housing. The important factor is that the house meets your needs and fits into your budget.
Here are some examples of how housing needs change over time:
- Starter Home – This could be a relatively smaller house for a single person, couple, or small family. Generally less expensive and may not have all the features that you want but meets the current needs.
- Bigger Home – As a family grows or needs change, a bigger home may be necessary. For example, the homeowner may need a 2 car garage, more bedrooms, or a bigger yard for entertaining. Location to schools, activities or work may also be a consideration.
- Second/Vacation Home – As life changes, it may be time to invest in a second home in addition to the primary residence where the family can vacation and spend time with family and friends.
- Retirement Home – The kids are grown and it may be time to downsize. Maintaining a big house can cost a lot of money and time. Downsizing is common in the retirement years. Many retirees will choose a location that is close to family, or find a more suitable area that meets their lifestyle.
A Journey to Personal Financial Success
At Morgan Franklin Fellowship (MFF), we support the concept of financial freedom – by teaching participants how to save by paying themselves first, invest for their future and grow their net worth.
Learning how money works and how to talk about money with others are the first steps towards recognizing an individual’s lifelong financial goals. Our online programs, podcasts, blogs, and book reviews and resources are designed to help you learn the concepts, rules and vocabulary of money, finance and investing.
Becoming an MFF Fellow
Our Standards of Financial Literacy – Learning about money series is engaging, full of interesting information, and easy to navigate. Adapted from the National Standards for Personal Financial Education developed by the Council for Economic Education (CEE), this robust curriculum features six short lessons on such important topics as earning income, understanding the value of saving and using credit. When completed, this program lays the foundation for becoming an MFF Fellow.
Becoming an MFF Fellow is the ticket to access additional MFF programs and opportunities for mentoring, networking, internships and real-world opportunities. Hear from the MFF Fellow themselves on how these opportunities encourage them to continue their journey to personal financial success.
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