By Lorie Konish - CNBC
When it comes to buying a home there are a number of challenges now, but owning a home can be a great way to build wealth and maintain property stability, said Kamila Elliott, a financial planner and co-founder and CEO of Collective Wealth Partners, a boutique advisory firm in Atlanta.
Reaching that goal today can be challenging with high home prices and higher interest rates pushing up mortgage costs, said Elliott, a member of CNBC's Council of Financial Advisers.
"If you're planning to stay in the area for five years, love the house, and have put together a budget to really evaluate all the costs of homeownership, I still believe buying a home now is a good idea," she said.
Some tips Elliott gives its customers can help potential buyers reach that goal:
💵 1. Prepare for monthly payments
Saving is one of the ways to be in the best financial position to buy a home, Elliott said. And that goes beyond the down payment.
If you pay $2,000 in rent a month and are going to spend $3,000 when you buy a home, for example, you should try to save $1,000 more monthly so you don't get surprised by the expense of the new home.
Buying a home is full of challenges. Getty Images
You should also focus on improving your credit, which will put you in the best possible position to get a good interest rate on your mortgage, Elliott said. That means reducing credit card usage, keeping an eye on your spending, and reviewing your credit report to correct any inaccuracies, if necessary.
🛠️ 2. Anticipate unforeseen expenses
One of the advantages of buying a home instead of renting it is that the expenses are fixed, Elliott explained. However, owners must anticipate surprises.
With many cities raising property taxes, future homeowners should anticipate that those costs are going to go up. They must also calculate payments for landscaping, furniture and unexpected emergencies such as a pipe breaking.
[These are the two U.S. cities where homes have lost the most value]
Elliot recommended making sure you have enough liquidity to meet those additional expenses as a homeowner.
🏡 3. Look for flexibility in your purchase
Although home prices and interest rates are high, there are still options for future buyers to cut expenses.
By getting a shorter mortgage – 15 years instead of 30, for example – customers can access lower interest rates. They should also consider acquiring "points" on their mortgage that will allow them to set a lower interest.
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Prospective buyers with lower incomes can search for homebuying or down payment assistance programs on their city or county websites.
As incentives for home buying begin to return, as with closing costs, be sure to ask if there are opportunities to reduce the total price of the property right now, Elliott said.