Are You Budgeting Properly for Your First Home?
Buying your first home is a serious undertaking and deserves proper planning. This brief article provides quick tips to help you budget properly as you take the necessary steps in buying your first home.
Pre-Shop in Advance
In addition to being a huge financial investment, buying a house is a big commitment in life and should be treated as such. Most advisors suggest to start pre-shopping for a home well in advance, this way you’ll have enough time to make the necessary preparations. One way to do this is by simply researching the areas that interest you most. You can check listings in those areas, reach out to family and friends familiar with the region, or connect with a professional realtor to ask a few introductory questions.
Ideally, you’ll want to consider the house size, qualifying or disqualifying criteria such as amenities, and of course the location. For example, if you love beautiful natural scenes you might want to search Banff Homes for Sale to find a dream location located within a national park.
Begin Saving For Your Down Payment
Generally speaking, the more money you can contribute towards a down payment the better because you’ll have greater flexibility regarding mortgage terms. Aim to put down at least 20% to increase your chances of being approved for a better mortgage rate. Doing so will also help you avoid having to purchase mortgage insurance, which can be quite costly. The more money you can reasonably put towards a down payment will yield a better interest rate, lower initial and ongoing fees, greater starting equity in your home, and lower monthly mortgage payments.
Take Inventory of What’s Needed
Will you need to purchase new or additional furniture? Will you need to purchase any major appliances such as an oven, dishwasher, refrigerator, or washer and dryer? You might want to plan for these expenses as a precautionary measure. It would be great if the previous home owner plans to leave those major appliances but it might not work out that way. This is another reason why proper planning is important.
Determine Monthly Costs
There are many costs associated with owning a home so you’ll want to start determining those in advance. While you may not be able to get the exact amount, with sufficient research you should be able to get a good estimate. One of the first costs to consider will be property taxes. While these vary according to location, you can use online assessment tools based on the home value and location to get an estimate. Other costs include but are not limited to homeowner’s insurance, utility bills, and general home repairs.
Practice Living on This Monthly Budget
Once you have a good idea of what your monthly costs might look like, then train yourself to start living on this budget. Implement this early, during the pre-shopping stage, to get a more realistic feel for what life is going to be like as a homeowner. This will also help determine if you can afford to live comfortably in the home you purchase or if other adjustments are needed.
The best thing you can do is to start planning early, especially if this is your first home. Reach out to trusted family and friends to ask for tips and connect with a local professional for additional advice and assistance.