For most people, buying a home is the biggest purchase they will make in their life. It goes without saying that this is not an impulse buy, but rather a purchase where preparation and research are vital. Before you even think about signing your name on that dotted line, you need to make sure that your personal budget is being kept in check. When you optimize your finances and view a home purchase as a lifelong investment, you can buy your new home with minimal financial concerns and good prospects for the future. These ten tips will help you get your personal budget in shape, get the best mortgage for your money, and finally buy the new home you've been dreaming of.
1. Calculate your household income after taxes
How much money do you have Check your paycheck or use an online income calculator and find out how much money you have after tax each month.
2. Make a list of all monthly household expenses
Next, you need to write down all of your monthly expenses like bills, utilities, insurance as well as groceries and any extras like tuition. The number you have left is your expendable income. Mint.com offers a free online budget plan that organizes your expenses and tracks outgoing expenses.
Having a personal budget is the first step in buying a new home.
3. Knowing where to cut
When you've got all your spending down, see if there are any areas that you can improve. You may be spending more than you expected to eat or pay for a service that you no longer use. Make adjustments so that you can put as much money as possible into savings and pay back outstanding credit cards and loans.
4. Pay off debts
While you can technically buy a home with debt, not only is getting approved but having your mortgage payments under control when you don't have to worry about outstanding debt. It will also improve your credit score, an important determining factor in buying a home, by minimizing what you owe as much as possible.
5. Save for a deposit
Although the economy appears to be on the up, lenders are still particularly cautious about lending. Many require a deposit of at least 20%. If you buy a home for $ 150,000, it means you have to pay $ 15,000 upfront. It may seem like a big part of the change, and it is, but keeping your personal budget focused on saving on that payment can definitely be done and improve your chances of getting an approval.
Buy your dream home with financial confidence.
6. Buy realistically
If you buy more home than you can realistically afford, it will eventually catch up with you. Most lenders advise that you can buy a home that is about 2.5 times your annual salary. The total cost of housing must include not just the mortgage, but other costs such as maintenance costs and homeowners association fees.
7. Get pre-approved
In order to truly put your best foot forward, it is recommended that you get pre-approved with a lender before starting your apartment search. When you're ready to make a bid, you will be taken seriously as they know you are already ready to move on.
8. Hire a house inspector
Hire a home inspector separate from the appraiser required by the lender to identify possible issues that you may have to deal with in the future. This also protects you from unforeseen major problems before the property is yours.
9. Check the market before making an offer
Before making an offer, do check out similar homes in the area to make sure you are paying a fair price in the local market. It could be a potential bargaining chip if the property you want is more expensive than other homes in the neighborhood.
Make this dream come true!
10. Buy a house
By taking the time to put your finances in order, save for a deposit, and research the market thoroughly, you will be ready to buy your new home with confidence.
Buying a new home will be an exciting chapter in your life, get it right and reap the benefits of a safe and happy future.
Jessica Galbraith is a full-time writer and writer.