Q3 2025
The Home Buying Edition
QUARTERLY INSIGHTS ON HOW TO ACHIEVE FINANCIAL HARMONY IN THE HOME
Q3 2025
The Home Buying Edition
THREE TIPS FOR FIRST-TIME HOMEBUYERS
DO’s and DON’Ts FOR THE OLDER & WISER
FOR THE LITTLES
Buying a house, whether for the first time or the fifth time, is one of the most important and impactful financial decisions you can ever make. But for first-time buyers — especially young adults or those with young kids — it can be a scary and overwhelming experience. That’s why it should always be a family affair. Every generation in the family has something to contribute to the process. Parents of adult children likely have their own wisdom to share gleaned from past purchases. Adults in their twenties and thirties have exciting new ideas of what a home should be like, look like, and feel like. And even kids can feel like part of the process by learning more about what it means to actually buy — as opposed to simply move into — a home!
In this edition, we’ll be looking at ways to be smart and supportive through the whole process whenever you or a loved one begins the process of buying or changing homes.
You’re only a first-time homebuyer once, and while it’s an exciting experience, there can also be a steep learning curve! Here are some tips to keep in mind as you look for a home of your very own.
1. Set a budget—and stick with it. Especially if you have good credit, you’re likely to be pre-approved for a bigger loan than will actually be reasonable with your budget. Figure out how much of your income you'd like to put toward housing each month, then trim it a little—that'll be the upper limit you shoot for.
A mortgage payment isn't just paying back a loan; it includes insurance, taxes, and other costs, often bundled together in an escrow account that gets added onto your monthly bill—and that’s before utilities or maintenance! In fact, as a rule of thumb, you should plan on maintenance costs totaling about 1% of the purchase price each year.
2. Down payment decisions. While there are programs that can reduce or even eliminate the need for a sizable down payment, it’s still a good idea to save up and pay down a chunk of change at the start. This will reduce your loan—and your monthly payment—and help you avoid having to pay mortgage insurance. As you’re figuring out your budget, consider your current assets and how much you can realistically afford to put down as a down payment.
3. Consider fixed and flexible features. In house-buying, there are some things you can change about a place with home improvements or time, and things that are pretty permanent. You’re unlikely to be able to change the size of your yard, but you can change its layout with landscaping. You can’t change the bones of a house, but the interior can often be adjusted. If you find a place that’s almost perfect, look at it through this lens to see if a few tweaks could make it just right for you.
QUOTES TO THINK ABOUT
“A house is made of bricks and beams. A home is made of hopes and dreams.”
—Ralph Waldo Emerson
It may have been years since your kids left the nest, but it’s exciting to see them reach the milestone of buying their own home. It’s natural to want to help and lend your own experience, but it’s also easy to overstep. Here are a few Do’s and Don’ts when it comes to supporting your kids as they buy their first home.
DO offer advice.
Share some of the pitfalls you’ve heard about or learned the hard way. Give your perspective on whether buying a fixer-upper or a home with a longer commute is really worth it. All of it can be helpful, especially early on in the home-buying process. The key is to keep it at advice rather than a mandatory lecture that your kids come to expect every time they visit or call. Maybe volunteer your top suggestions or warnings and then take a step back. Let them follow up with you for more tips, but otherwise simply ask how things are going and leave it at that.
DO chat about finances.
In the same vein, it’s okay, and usually even a good idea, to talk with your kids about where they are financially as they embark on what will likely be the biggest purchase of their lives so far.
Helping them figure out the dollars and cents of what they can afford and providing perspective on how to keep from being “house poor” can be valuable information.
DON’T loan or give money casually.
For parents in a position to help financially, offering a loan or gifting a chunk of money to help with a down payment or other costs can be a natural impulse. Be clear with your child about whether this is a loan or a gift, and keep in mind that there are different tax implications for each. If it’s a gift, putting aside money long before the purchase date could create some benefits. Also, understand that it is a gift and therefore can’t come with controls over decisions with that home. If it’s a loan, make sure you draw up specific terms of repayment. Understand that, even if you want to lend at a low rate, an official loan must at least charge the Applicable Federal Rate, which is set by the IRS.
DON’T co-sign a mortgage without careful thought.
If your child needs a mortgage but can’t qualify for one — because their income isn’t high enough or there are issues with their credit record — you may be tempted to help by offering to co-sign the mortgage. This means you are essentially acting as the guarantor of the loan by assuming responsibility for repayment if your child can no longer do so.
This option comes with significant risks. For instance, if your child misses their monthly payments, it could negatively impact your credit score. It could also subject you to property taxes and insurance costs.
Only agree to co-sign a mortgage if you are absolutely certain your child can make their monthly payments consistently and on time. You should also agree in advance on how to deal with any payment problems if they occur.
DO think about your other children when providing help to the one buying a home.
If you have more than one child — or grandchild, if that’s who you are helping — remember that any assistance you provide can affect the others, too. They may expect the exact same level of support once it’s time for them to buy a home...or even resent not getting as much help as their sibling(s) did.
The ultimate takeaway: When helping someone buy a home, whether financially or emotionally, remember to keep all your relationships in mind!
FAMILY FINANCIAL FACTS
17% of home buyers purchase a multigenerational home, either for cost savings (36%), to take care of aging parents (25%), because of adult children moving back in (21%) or to house adult children who never left (20%).
SOURCE: National Association of Realtors
WHAT ABOUT DOWNSIZING?
Moving to a new home isn’t just a question for young adults. It’s one for retirees, too — usually in the form of, “Is it time to downsize?” It’s a loaded question, and there’s no one-size-fits-all answer. However, there may be good reasons to consider downsizing if your personal situation demands it.
Health. Many people consider downsizing due to health concerns. Maybe there are too many stairs to climb. Maybe the yard is a little too big to continue to mow every week. If you ever consider downsizing due to your health, we recommend consulting your physician first. If health is your primary motivator, it may be wise to look at moving into a retirement community rather than merely a smaller house.
Location. Others will consider downsizing for geographic reasons. Maybe the grandchildren are being raised in a neighboring county, or you want to split your housing costs between a summer and winter home.
In this case, downsizing and moving to a different area can get you closer to your dreams and desires.
Cost. Another consideration for downsizing is the potential savings. Maybe you are paying more than necessary on your mortgage or maintenance. Or you just want to cash in on your equity. Whatever your reason, please let us know if we can ever help you crunch numbers, review options, and reach an informed decision!
If your parents are shopping for a new house, you might be hearing a lot of new words. Buying a home can be complicated, but it’s not as mysterious as it seems!
To buy a house, most people need a loan from the bank, which means the bank will give you money now and be paid back with extra over time. That loan of money from the bank is called a mortgage.
When you buy a house with a mortgage, you pay a certain amount every month until the house is paid off—usually after 15 to 30 years!
Besides the mortgage payment, you have a little extra money that you pay every month that is used for things like taxes and insurance. This extra money is placed in escrow.
Escrow is like a middle person who holds onto money or other important things until both sides of the agreed loan keep their promises. The escrow amount paid usually stays the same for a while but could go up or down if tax and insurance costs change. Many people also save up money so they can pay for part of the house first. This is called a down payment. A down payment makes it, so the mortgage amount is lower each month.
When people look for a home, they aren’t usually looking for a perfect house, but one that has the kinds of features they want most.
That often includes things like the number of bedrooms or bathrooms, if there’s a yard and how big it is, and if the location is by good schools or close to where someone works.
Most of the time, people need a real estate agent, sometimes also called a Realtor, to help them find and buy houses that are for sale.
Buying a house isn’t like buying a bike or a TV. Besides getting a mortgage, you have to get an inspector to say the house is in good condition. You also do a lot of paperwork to make sure the house and yard are being transferred over to you legally. It can be a long process, but when you get through it and have the keys to your new house in your hand, it can be a very happy and exciting experience!
Some of the words used in this article from the previous page are hidden in this word search. Can you find them?
Minich MacGregor Wealth Management
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