For BuyersFor Home OwnersInvestingReal Estate Related September 27, 2022

What to Ask Your Financial Planner Before Buying a Home

US home prices continue to rise in 2022. Just last March, prices spiked at a rate of 20.6%, making it the highest year-over-year price change in over 35 years. With rapid home price surges across 20 different US cities, it’s crucial for aspiring homeowners to consult with financial planners to better navigate the pressures of enlarged home values. That being said, demand for personal financial advisors has likewise increased; their employment rate is even set to grow by 15% in the following years. As formal finance education now focuses on investment strategies and securities analysis, planners can make informed recommendations according to your income, debt, and credit history. This advice will help you manage the potential risks and returns when purchasing a house. For instance, finding the right mortgage can help homebuyers retain a decent part of their gross income, and meet future maintenance and repair costs better.

The questions you ask your financial planner before purchasing a house can lead to a more well-rounded decision. We’ve listed below the four questions you need to start with.

1. How much can I actually afford?

Mortgages are quite costly and can affect your plans of buying your dream home. As it stands, a $300,000 loan, for example, can require you to pay $1,734 a month. Now although financial calculators prove beneficial in planning your budget, they aren’t enough. It’s important to seek advice from a financial planner on how much you should save for house costs. Consulting a professional is especially relevant if your budget oversees non-negotiable costs like student loan debt. Financial planners can identify your debt to income ratio, which is used when you apply for a mortgage, and suggest how much you should borrow — this way you don’t have to stretch your budget thin.

2. What type of mortgages can I pick from?

Your financial planner can present a selection of mortgages that are proportional to your financial situation. Below are some of the mortgages you can apply for:

Conventional loans

These loans require a strong credit score and come in two types: conforming and non-conforming. Conforming loans, specifically, follow a set of standards for loan size, debt and credit created by the Federal Housing Finance Agency. Most areas have a loan limit of $647,200, while expensive locations go up to $970,800, so it’s best to talk to your planner to know how much you can take out for your home — especially if you want to purchase a house in expensive areas.

Government-backed loans

FHA, USDA, and VA are among a few examples of this loan. There are varying conditions for each, like how much money should be put down, and your planner can see if you qualify for these loans. Typically, VA or USDA loans need high credit scores, whereas FHA loans require much steeper down payments. Also, if you aren’t within a low-to-moderate income level or don’t prefer a home in rural areas, your advisor might warn against taking out a USDA mortgage.

3. How much do home insurance policies go for?

Alongside your mortgage plan, financial planners make sure you get the right insurance coverage for your needs. Insurance plans should correspond to the type of coverage your house requires, and planners can base them on the home’s past claim history and physical condition, as well as its location. On average, the cost of homeowners insurance policies in the US amount to $1,312 annually for a $250,000 dwelling coverage amount. If you live in disaster-prone areas, however, insurance premiums can rise up to 12.1%. Ultimately, home insurance policies differ across different houses, so speak to your planner about which coverage best suits you.

4. Should I place my home in a trust?

Houses are large purchases that double as assets. Consult your financial planner about having your home protected through an estate plan (which transfers any legal responsibility of your assets to trusted loved ones). In particular, trusts enable you to pass down your home to another. Depending on your home’s value, planners can recommend whether a trust is beneficial for you. A house worth $160,000, for instance, can be included in a trust. Trusts are ideal if you’re buying an expensive home, as they prevent your family from undergoing probate court to contest homeownership rights. If you’re worried that placing your home under a trust means losing control over the property, don’t be. As your financial planner will affirm, a trustee can choose how and when their beneficiary will inherit the house.

Finding your Financial Advisor with Kari Haas

The Kari Haas Real Estate Team works closely with a trusted Financial Advisor and has connections and referrals for you in all steps of the home buying/selling process. Give Kari a call to be connected with one of our highly recommended service providers.


Article exclusively submitted to

Written by Rita Janine

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