Budgeting to buy a home isn’t as hard as you might imagine. These 7 tips will show you how.
By budgeting now to buy a home, soon you’ll be ready to plan your housewarming party and send out invitations (which you can do without spending a penny!). But you must get your financial plan in order first.
Prior to beginning your home search for hiring a real estate agent, it’s crucial to create a budget that works for you. Budgeting to buy a home can be overwhelming at first, but these Money Tracker tips will put you well on your way to wise financial management and homeownership in no time!
1. Determine your monthly income is the first step to budgeting to buy a home
The first step to budgeting to buy a home is figuring out how much money you’re bringing in each month. Include all your income sources, including any side jobs or freelance work you do. Having a clear understanding of your actual income will help you decide how much you can afford to spend on a monthly mortgage payment.
2. Track your monthly expenses
Once you know how much money you’re raking in, you need to see where your dollars are going. Keep track of all your expenses (e.g., rent, utilities, food, etc.), and consider using a budgeting app to organize your expenses in one place. Doing so will give you more control over your finances and decision-making.
3. Decide on your home down payment
One of the biggest financial factors to consider when purchasing a home is your down payment. A standard down payment is between 5% and 20% of the home’s value. For instance, if you’re looking at a house that costs $200,000, you can expect to put down $10,000 – $40,000 as your down payment. Be sure to factor in this expense when creating your budget!
4. Calculate your monthly mortgage payment
Use a mortgage calculator to estimate your monthly payment. Don’t forget taxes, insurance, and any other fees associated with the mortgage. You need a realistic idea of how much money you should save before getting too deep into the homebuying process!
5. Cut back on unnecessary expenses
You know how much money you need to save each month, and now it’s time to evaluate your current expenses and determine where you can cut costs. You may need to adjust your current lifestyle, such as dining out less frequently, downsizing some subscription services, or figuring out how to save on fuel. You might be surprised by how big of a difference it can make for your finances when you trim your spending! This is one of the most important steps in budgeting to buy a home.
6. Work with a budget coach
House hunting is one of the most exciting things you can do, but it can also be incredibly stressful. A budget coach can help you navigate the waters of house hunting and stay within your budget. The key is to find someone who understands your financial situation and can help you make informed decisions about what you can afford.
A good coach will work with you to set a realistic spending plan and help you find ways to save money along the way. Whether you’re a first-time homebuyer or looking to upgrade, don’t underestimate the value of quality budget coaching services!
7. Look into the Commissary
Lastly, consider the Commissary when shopping for items for your new home. You may think of it as just a place to buy groceries, but it can provide so much more.
From household items to electronic devices, the Commissary has a wide range of products that could fit perfectly in your new home. And many items are offered at discounted prices, which could keep you and your family in a much better financial position.
In summary, budgeting to buy a home is achievable
Establishing a budget as a future homeowner might sound too daunting to take on, but you must do it to stay on track financially. Consider all your potential expenses and track all of your spending.
Make sure you know how much money you should save for your home purchase, and follow the other tips outlined above. You’ll be well-prepared to take your first steps toward homeownership when you have a realistic and strategic budget on your side!
Would you like to read more helpful content or learn about our budgeting coaching services? Visit MoneyTracker.com today!
Gave Perkins created LittleMoneyBigHouse.com to share tips and advice based on what he has learned through the years like tools for project planning, and hopefully, a little inspiration to keep people going when they hit a challenge.