7 Things Financial Planners Wish You                                                                                                       Knew About Buying a Home


1. Buy only if you plan to stick around

When you purchase a house, you have to shell out a significant amount of cash for closing costs—fees paid to third parties that helped facilitate the sale.  Typically, you want to own a home for at least three years in order to recoup the initial costs of buying the home.


2. Factor in the full costs of homeownership

When weighing whether it makes more sense to buy a house or continue to rent, don’t focus solely on your mortgage payments—you’ll also have to pay property taxes, interest, home insurance, utilities, and other expenses.  You should also have an emergency fund ( 1-2 percent of your home’s value) set aside in case something goes wrong with the house.


3. Try to make a 20% down payment

Unless you qualify for a Department of Veteran Affairs loan or Federal Housing Administration loan, you’re going to need to obtain a conventional home loan from a private mortgage lender. When doing so, aim to make at least a 20% down to avoid paying private mortgage insurance, an additional monthly fee that protects the lender in case you default on the loan.


4. Don't raid your retirement funds

Borrowing from your IRA or 401(k) to amass a down payment on a home is the last place you’d want to go for your down payment.  You will get charged income tax and an excise tax on the amount you withdraw.


5. Make sure your credit score is up to snuff

You need to have solid credit—typically at least a 650 credit score—to qualify for a conventional home.


6. When buying a home, watch your spending carefully

In the months leading up to your home purchase, make sure you don’t take any actions that could hurt your credit score. These mistakes include closing old credit card accounts, opening a new credit card, maxing out your credit cards or making a large purchase such as a new car.


7. Don’t bite off more house than you can chew

This one might sound obvious, but a lot of people make the mistake of buying a house that’s simply outside what they can comfortably afford.