Are you currently contemplating buying a home but aren’t sure if you can continue to afford your current lifestyle? Chances are you can afford both. Wise budgeting and following these tips can assist you in purchasing a home without emptying your wallet.
Determine Your Income
To establish a good starting point to determine how much you can afford to spend on a house you must figure out your total income. Add up all sources of your total monthly income to determine this figure. Once you have determined your income, a ballpark rule for determining a maximum mortgage payment is multiplying your monthly take-home pay by 25%. Whatever this number maybe is the suggested maximum monthly mortgage payment you can afford.
A Healthy Down Payment
The goal of homeownership is to be able to put down at least a 10% down payment on the price of the home. While 20% or more is ideal, it is not required. However, you will save yourself money in the long run by placing a 20% or more down payment as this will eliminate the additional private mortgage insurance fee you will see with a smaller down payment. If you haven’t started saving for a down payment for a home, you should start there.
Budgeting
In order to fully trust that you will be able to continue your current expenses that you value and become a homeowner, budgeting is the perfect place to start. Budgeting consists of having a plan for your money and typically leads to smarter spending. Begin with your total monthly income you have totaled. The goal should be to budget to $0. Budgeting to $0 means that all of your money will have a specific place to go, you may be surprised by how much you have “leftover” that you can now put into a down payment fund.
The next step to budgeting is to list all of your monthly expenses. This includes fixed and non-fixed expenses. Not to mention, you may need different expenses each month. For example, you may need a “Christmas” budget for the month of November or December or a back-to-school fund to buy school supplies in August. Regardless, budgeting is a truly beneficial act that you should begin today.
Become a Homeowner
If you believe you are ready to take the next step into homeownership, begin by utilizing a house payment calculator. This useful tool can provide you with the estimated monthly mortgage payment you can expect with the price of the home and down payment you are looking to seek. After determining what price range seems appropriate for you, contact a real estate agent to get the process of homeownership started.
One Response
Budgeting is extremely important especially nowadays that there is an ongoing pandemic. Thanks for these tips, Mommy!