Are you ready to invest your money into a home? A home is one of the biggest assets and investments you will ever have, but it’s also a non-liquid investment. Once you make your down payment, you can no longer easily access that money for any other reason—even if it is an emergency. So before you think about purchasing a home, you need to do a serious review of your financial situation and do some risk management.
Risk management helps you determine the amount of risk you are taking when buying a home by identifying, analyzing, evaluating, and treating loss exposures. It also monitors risk control and financial resources to mitigate the adverse effects of loss.
Since every real estate transaction involves risk, buyers should know how much risk they can handle and how they will choose to manage that risk. If after you’ve done a self-audit and still have money in your emergency savings which you don’t need to use towards a home, you may be able to purchase a home with a low amount of risk. A high-risk home purchase would be one in which you have little disposable income and wouldn’t have any money in an emergency.
Your house can be an asset right now, but there is no guarantee that the price you pay for it will be the same amount you can sell it for in the future. Often, this situation is unavoidable, such as if property value in your area drops or you paid too much for the home. Risk management can help you get a fair deal by helping you determine how much you can afford and keeping you within your budget.
If you aren’t planning on staying in the home for at least 5-7 years, it is probably not worth the risk and money to purchase the home unless your financial situation allows you to do so without strapping your budget. Your financial adviser can help you with risk management and help you determine if buying a home is within your means, and your real estate agent can help make sure you’re paying a fair price for the home.
Putting a home into a trust may seem like an option reserved for older homeowners who have paid off their mortgage and have accumulated an estate, including assets such as a home, motor vehicles, various investments, boats, rental properties, furniture and even a vacation home. However, having a home that’s owned outright is not necessary […]
The start of a new year is often seen as the time to make major changes in life. While many people resolve to start hitting the gym, losing weight, reading more, or making a career change, others may decide to buy a new home in the coming months. That’s a great goal, one that can […]
Buying a home is one of the most exciting events in a person’s life. A new home can mean a new direction, a major step forward, the beginning of a family or just a fun opportunity to live in a new state, city or neighborhood. It’s also a complex task that involves several important steps. […]
