3 Simple Steps to Buying Your Dream Home

author/source: Therese R. Nicklas, CFP

Photo Courtesy of todd kent  Dream HomeYour dream home.  Whether you're buying a starter home or your forever home, knowing what you can afford is key to attaining your homeownership goal.  Getting the price right takes patience.  It's a balancing act between what you can afford, what you want to pay, and what you might have to give up to attain your dream homeownership goal.

Things To Consider for Your Dream Home

Before you begin your home buying journey, you should know where you want to live. If you plan to stay put for at least 10 years, aim for a home that will fit your family long term.  For example, if you're planning to increase the size of your family, a starter home might be quickly outgrown.  Consider compromising on must-haves for more square footage in your living space.  By doing so, you could potentially avoid having to sell and buy when inventory is low and your dream home's price is overinflated.

Photo Courtesy of pixasquareIt's All Business

Buying a house is probably one of the largest purchases you will make and it should be approached as a business transaction.  But, it is also one of the most emotional.  You're not just making a real estate transaction, you're buying a home.

3 Secrets To Getting Your Dream Home

Here are three secrets to buying the most house you can afford without becoming house poor.

Know Your Numbers

One of the things that trips up a potential buyer is not fully understanding their cash flow. This is a great opportunity to do some honest number crunching.  Use this simple cash flow calculator to determine your monthly take-home pay, expenses, and income surplus. 

Don't forget hidden expenses.  For example, if you routinely withdraw "pocket money", how much do you draw, and where does it go?

Do Your Homework

Next, try to estimate what your dream home will cost.  Include an estimate for real estate taxes, utilities, commuting, and maintenance.  Will the house need work?  How long can you wait before tackling a major renovation, and is it something you can save up for?  

Photo Courtesy of Stephan BechertTo get the most favorable loan terms, aim for a 20% downpayment.  Will the needed downpayment drain your emergency fund or other savings?  If you're selling a home to buy another, do your homework so you discern a reasonable net sale amount, and how much money you'll have available to invest in your new home.  It's a good idea to speak with a local Realtor that knows the area well.  In addition, do your own market research.  You can find helpful market analysis tools on websites such as Zillow and Realtor.com.  It's always wise to estimate conservatively.  For example, think "worst-case scenario".

Pre-Mortgage Preparation

Before you submit your mortgage application, do some pre-mortgage preparation. Request a credit report from all three bureaus. Usually, your bank will give you one annual report for free.  If you have to pay, the cost is nominal. Pulling your own credit report is a "soft pull".  This means it will not impact your credit score.  

Photo Courtesy of Luke StackpooleWhen you receive your report, check it carefully for errors.  Follow the instructions to get them corrected, and potentially improve your credit score.

According to Dave Ramsey, your mortgage payment, including principal, interest, taxes, and insurance (PITI) should be no more than 25% of your monthly household take-home pay.  Most lenders use a less conservative calculation.  Nerd Wallet offers useful tools and calculators to help you determine how much house you can afford.

By making a plan and showing up prepared, you have a greater chance of finding your dream home, and having your lender say "you're approved"!



Therese R. Nicklas is a Certified Money Coach (CMC)® and CERTIFIED FINANCIAL PLANNER™.

For close to 20 years, Therese (Terri) has coached clients toward building long term wealth so they can enjoy financial freedom.

Over the years, Therese witnessed the negative effect a lack of financial knowledge creates, especially for women that don’t have control over the family’s finances. Her journey brought her to develop an education and coaching system to help women by empowering them with smart money strategies.

Photo of Therese NicklasTherese works with women that are ready to take action and passionate about living their life by design and not by default. She is one of a few practitioners certified in Money Coaching and Financial Planning. Her distinct coaching system helps her clients understand the money patterns, beliefs, and behaviors that created their results. Her money coaching process inspires action by teaching new behaviors that get results quickly. By clearly defining and designing their ideal lifestyle, clients develop a positive relationship with money and learn to have fun with the planning process.

Helping clients plan for the future while enjoying the present is not a job for her, it is a calling. She sums her philosophy up by saying “live your life by design, not by default.”

Therese lives her life by design when she’s spending time with friends and family, traveling, cooking, and hiking with her rescue dog Gracie and grand-dog, Jackie."

Therese has been featured in the Wall Street Journal, Forbes Magazine, Financial Planning, and more. She is a sought-out speaker, serving as a subject matter expert for many alternative wellness and healing centers, divorce mediators, and community groups.


800 Hingham Street Suite 200 Rockland, MA 02370  -  781.413.1090  -   [email protected] 

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