Northwestern Mutual

Buying a New Home

Buying a new home is an exciting milestone.

Buying a New Home

Buying a new home can be one of life's most gratifying accomplishments. As you prepare to take that big step, make sure you're ready for the financial commitment. When you approach your decision with confidence, you'll be free to enjoy this exciting time in your life.

Consider taking these steps before purchasing your new home:

Home Buyer Guide
  • Decide how much you can afford. There are a number of online calculators that can help you ballpark how much you may be able to afford. They'll take into consideration your monthly income, your monthly expenses and the amount of money you have available for a down payment.
  • Pay down debt. It's not necessary to be debt free to qualify for a mortgage, but lenders do consider your debt when qualifying for a loan. To manage your debt more effectively, start by setting a realistic budget for yourself.  Learn more about what's involved in setting a budget. Learn More.
  • Protect your income. Your ability to earn an income is your greatest asset. Protect it. If disability income insurance is offered through your employer, take advantage of the opportunity and the group rate that may be offered. However, group plans cover only a portion of your income. So to fully protect yourself, you may want to consider a supplemental individual policy. An individual policy can also be a great way to protect your income if you're self-employed. Learn More.

    If you should develop a chronic illness or disabling condition, long-term care services can help you get through your daily routines. Extended long-term care is not covered by Medicare, Medicaid or health insurance plans, which is why any plan to protect your income should include consideration of long-term care.

    And, to protect the financial future of your loved ones, consider purchasing a life insurance policy to make sure they're taken care of after you're gone. Both term and whole (or permanent) life insurance provide benefits to your loved ones to pay bills or take care of other financial obligations in the event of your death. As an added benefit, whole life insurance also builds cash value that can grow tax deferred and can become a source of funding you can utilize1 easily; no credit checks, no applications, no waiting for approval. Of course, if you borrow against the cash value and don't pay it back (with interest), the amount of the loan would be deducted from the amount your beneficiary would receive in the event of death.
    creating a solid financial plan
    If you're part of a couple, both of you should be insured.
  • Establish an emergency fund.  No matter how carefully you may plan the purchase of your new home, there will always be unexpected expenses. Plan for them by establishing an emergency fund. Aim for a total of six months of living expenses. Learn More.
  • Check your credit.  Check your credit report to ensure there aren't any errors that would prevent you from being considered creditworthy.
  • Consider the impact of a mortgage on your overall financial goals.  While buying your new home is an exciting milestone, remember to also save for other long-term goals, such as retirement or a child's education. Setting aside even small monthly amounts for these other goals will make a big difference in your ability to achieve them.

More on This Topic

Click on the links below to access more information. 

  • First-Time Home Buyer's Financial Guide

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    First-Time Home Buyer's Financial Guide

    What you need to know before buying your first place.

  • What Will It Take to Save for a Vehicle, Home, Etc.?

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    What Will It Take to Save for a Vehicle, Home, Etc.?

    This tool calculates different combinations to save a lump-sum amount that you intend to use to buy a vehicle, home, or other big-ticket item.

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  • The Guide to Credit Scores

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    The Guide to Credit Scores

    Understand the power of great credit and what it takes to help build and maintain a great credit score.

  • Create a Budget in 5 Simple Steps

    Create a Budget in 5 Simple Steps

    Learn the five simple steps to create and follow a budget.

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  • Plan Wisely. Live Confidently.

    Plan Wisely. Live Confidently.
    Plan Wisely. Live Confidently.

    Learn how our time-tested strategies and expert advice can help you reach your life goals.

    View our Interactive Brochure
  • How much should I set aside for emergencies?

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    How much should I set aside for emergencies?

    This tool shows how much you need to save, in total and on a monthly basis, to create an emergency reserve fund.

    Learn more