Is Buying a Home the American Dream or an American Nightmare?
About a month ago we just closed on our first home, and we LOVE IT!??We have more room, an excellent community, and a big backyard for the dogs to run around.??With that said, the process of saving, establishing credit, justifying income, and finally negotiating a fair & affordable price was not fun.??Also, I would not recommend moving with a 10-month-old & 3-year-old.
?
Economic Environment:
Nationally, in the last 3 years the average home price rose 26% from $329,000 in 2020 to $416,100 in Q3 2023.??In Oklahoma we saw a 20% increase from $200,000 (2020) to $240,000 (Q3 2023).??At the same time, the average 30-year fixed mortgage rate has increased from 3.1% (2020) to 8% today.??
But what does that mean in hard numbers?? To purchase a home in 2020, you’d need to save up to $65,800 for a 20% down payment, with a monthly mortgage payment around $1,100.? Today you’d be looking at $83,220 down with a monthly mortgage payment of $2,500!? [This is based off a 30-year fixed loan and doesn’t include closing costs, home-owners insurance, property tax or HOA dues.]
At the same time, we’ve seen inflation increase from 1.2% (2020) to 7% (2023 forecast); putting a chokehold on the average American’s budget, and eroding cash savings.? With rising home prices, increasing interest rates, tightening credit and high inflation, how in the world are young families supposed to afford a home?
?
Everyone’s circumstances are different.? In our case, success was determined by the team we put together.
?
Mortgage Lender:
As a family we spoke with 6 different lenders until finding someone who could provide a solution. Our problem was related to cash savings or assets, but more about how we earn our income. If you’re a business owner, the variability of your income makes it hard to establish credit.??Having a lender that will work with you, hear your story, and understand your true financial picture (not just the last 2 years of tax returns), is not only invaluable but essential.
?
Real Estate Agent:
I lucked out.??My wife is a Real Estate Agent that works with a very experienced team.??But if that were not the case, finding an experienced, trustworthy Agent is a must.??Not only will they help find the home and negotiate the price, but a great Real Estate Agent will quarterback the entire home buying process.??A great Agent will have lending relationships, knowledge of the area, transitional support and most importantly will communicate with you daily. A great Agent EARNS their money by putting you in the best situation to buy.
?
Accountant:
In most situations, TurboTax just doesn’t cut it.? From personal & professional experience, most people need a real-life brick & mortar accountant. Unless you have heavy experience in tax accounting, the cost of hiring a professional more than justifies the potential tax savings.? Accountants are critical for the home buying process too.??Our accountant established a game plan on business structure, reportable income, and tax strategies.??Finally, his team had everything neat & tidy ready to send to the bank.
领英推荐
?
A True Fiduciary Financial Advisor:
At the end of the day, you need to have a plan.??A plan not just centered around permanent life insurance or investment “micro-management” (the two extremes in the industry today).??You need a plan addressing both your short-term & long-term goals.??A plan that considers where you are today, where you want to be in 5-40 years, and how you’ll get there.??
?
True Financial Advisors will assist with the budgeting process, savings strategies, and investment allocations for each goal.? Most importantly, they will review your progress with you regularly.??You need a fiduciary who has your best interest at heart, not just someone who sells a product.??People in the home buying process that work with a True Financial Advisor don’t have to worry about tabulating their net worth, or fret about how a mortgage payment will fit in their budget.??Those are items that should have been established in the first few meetings with financial documentation available upon request.??Great Advisors also have a professional network of experts who can help you too.
?
The best Financial Advisors ask questions, listen, and find solutions.??When a True Financial Advisor’s clients decide to pull the trigger on a home purchase, they get to enjoy the American Dream, not an American Nightmare.
?
If you have questions, I’d love to help.
?
Michael P. Jewell
Financial Advisor
C: (405) 830-7086
?
*Everyone’s circumstances are different.? I am not an Accountant, Lender, Real Estate Agent, nor am I advocating for or against the decision to buy or rent.? It all depends on each individual financial situation.? As a Financial Advisor, I would love to meet and establish a plan tailored toward your individual goals & objectives.? Once a plan is in place, I can most certainly recommend trained licensed professionals to assist you.