What to expect when you’re expecting (a new house)

Are you on the hunt for a new house? For better or worse, buying a house – not to mention moving itself – can be a stressful affair. Here are some financial tips to keep in mind as you prepare for the hunt.

  • Understand your mortgage: Unless you’re paying cash for your house, you’ll have a mortgage, which includes four parts known as PITI – principal, interest, taxes, insurance. To determine your monthly mortgage payment, be sure to choose an online calculator that includes all four parts.
  • Look for a loan first: You’ll need a loan to purchase a house, and being pre-approved for a mortgage is a vital step. Often, people fall in love with a house first – bay windows, coffered ceilings, a big backyard – only to discover in the application process that it is out of their price range. Being pre-approved for a mortgage will help you make a smart financial decision rather than a rash, emotional one.
  • Take the long view: Buying a house can be a poor investment if it won’t suit your needs in a few years. Consider your personal situation when buying: Are you planning to have children soon? Will you be taking care of your parents at your house as they age? Are you physically capable of taking care of the house? In short, think about the life you want to live – both today and tomorrow – when purchasing a house.
  • Think about reselling: Odds are you won’t be in the same house forever. And if you can’t resell it, you can get stuck with a pretty hefty bill. Always purchase with an eye toward your future and what makes the property attractive to potential buyers. It’s usually prudent to be wary of houses in bad neighborhoods, bad school districts or on busy streets – evaluate your personal situation and the potential of the house and the area in five, 10 and 20 years.

There are plenty of other factors to think about – such as finding a realtor or whether you want a house that requires immediate improvements. By taking an organized approach and considering everything from finances to timing to location, location, location, you’ll set yourself up for a positive house-buying experience.


This information is provided for informational and educational purposes only and may include references to concepts that have legal, accounting and tax implications. It is not to be construed as legal, accounting or tax advice, and is provided as general information to assist in understanding the issues discussed. Waddell & Reed does not provide tax advice.

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