Buying a house is a big step, and if you’re like me, you will want to double, no - triple, check that everything is done right. The whole process can be scary, and often times clients wonder if they really can afford that house. Here are some tips to help you have the right mindset when investing and saving for your home sweet home:

1. Know Your Time Line- If your goal is buy a house within the next two years, I do not suggest investing your down payment. If you do, you may run the risk of higher taxes and investment loses. If you are buying in the near future, consider finding the highest paying savings account you can and stash your money there. Otherwise, if your goal has a slightly longer time horizon, investing is, almost always, the way to go. Just be sure to invest in things that are safe and appropriate for your specific time horizon (yes, we can help you figure this out!).
   
   
2. Know Your Budget- This is huge because you need to make sure you are living within your means. I repeat, LIVE WITHIN YOUR MEANS. This is always good advice, but it is especially critical if your goal is to save for a house. Every extra penny, every extra $6 Starbucks that you skipped out on, makes a difference. You should have a solid budget plan, and be disciplined in sticking to it. If you don’t have a budget, well guess what, it’s your lucky day…contact PACFS and we will get you started on one, FOR FREE.
   
   
3. Know Your Options- In most cases, it is highly recommended to have 20% of the total cost of the house, in cash for the down payment. In fact, you should always assume this is the case, but that being said, there are options for some people that will offer you a way to have less down, like for example first time home buyers and veterans. Now, keep in mind that these loans tend to have large drawbacks and you need to be aware of them. Nothing is ever free, always remember that!
   
   
4. Know The Rates- If you plan early, then you will have time on your side. Interest rates will fluctuate year over year, and even month over month. It is always a good idea to stay aware of the rates and the direction they are moving. This will allow you to make educated decisions when it comes time to actually start looking. FYI- rates are REALLY low right now, so if you’re looking to buy (or even refinance) now is a wonderful time! 
   
   
5. Know Your Ratios- When you apply for loans, many things are taken into consideration, like your income, your debt, your job, etc. There are a few key ratios that they will run based off of those stats. A huge one is the debt-to-income ratio, which, as I’m sure you guessed, takes the amount of debt you have divided by the amount of gross income you make. This ratio, along with a few other factors, are used to determine whether or not you will get approved. The loan companies will want to see that your ratios are below a certain level, which indicates you can afford the house at hand. If you are at the point where you are starting to look at houses, please contact us so we can first run a test and see where you land with these ratios.

There are so many factors that go into home ownership, and the process of becoming a home owner. The biggest piece of advice I can give is to know your budget and know your numbers BEFORE you even start looking. In fact, the sooner the better. Even if you think this dream is 5, 10, 15 years down the line, it is never too early to start planning; and who knows, maybe you’re closer than you thought! 

If you want to start planning for a house and need help with one or all of these things, please contact us. Our budgeting sheets are free and super useful. As long as you are willing to put in the work, we are always here to help guide you! 

Disclosure: This communication is for informational purposes only and does not purport to be a complete statement of all material facts related to any company, industry, or security mentioned. The information provided, while not guaranteed as to accuracy or completeness, has been obtained from sources believed to be reliable. The opinions expressed reflect our judgment now and are subject to change without notice and may or may not be updated. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. This notice shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which said offer, solicitation, or sale would be unlawful before registration or qualification under the securities laws of any such state. Readers who are not market professionals or institutional clients of [Firm] should seek the advice of their financial advisor before making any investment decisions based on this communication.