Are you in the market to buy a new home?
If so, you aren’t alone. An estimated 5.25 million homes will be sold in the year 2019!
For many people, buying a home can be the biggest financial decision of their lives. Because of the magnitude of the decision, it’s important to consider what you can afford.
Not taking your budget into account before you sign on the dotted line for a home can cause years of unnecessary stress and financial hardship.
Read on to learn how to create a budget for buying a new house!
Consider Your Costs Now
Home buying requires you to consider your costs in the present day.
It is helpful to write out a list of your current costs, but be sure to not be too conservative. As you write out your costs, you should consider ways to reduce them.
The lower your costs, the more comfortable you will feel with taking on a large, new one. Only 34 percent of Americans have 100 percent equity in their home. This means that 66 percent of people in the United States have a mortgage or other outstanding debt obligation held against their home.
When you look for a mortgage broker near me, you can find someone who will identify your costs and help you understand what you can afford!
Predict Future Costs
Buying a new home is about more than considering the present! You need to take a serious look at your future costs to get a true feel of if you can afford your home.
For example, how do you expect your costs to rise during the life of your mortgage or otherwise? This evaluation requires you to think a bit about what you want from your life in the future.
Do you plan to get married? Have kids? Change jobs? Each of these decisions can have a significant impact on the home you can afford.
Determine Extra Costs
When you are looking at your budget, it’s important to remember the difference between fixed costs and variable costs. For example, fixed costs may be things like your cable or phone bill.
But variable costs can be those that change with market conditions. These can be things like your mortgage, power, and water. But it’s crucial to remember that your fixed and variable costs may not be your only ones.
Extra costs are bigger expenses that can pop up from time to time. For example, car repairs and appliance repairs can catch you off guard unless they are planned for in advance.
But based on your budget, can you still plan for these in advance after taking on the mortgage payment of the new home.
Wrapping Up: Budgeting to Buy Your New House
Buying your new house is an exciting but stressful time in your life.
There are a lot of moving parts to the purchasing process, but there is also the need to take a look inward to determine what you are comfortable with.
Finding out how to buy a house is just one of the things to overcome when you make a purchase. But use these tips to help you find the best home for you – and one you can afford to own now and into the future!
Keep reading our blog for more insights.