How to Buy Your First Home Without Busting Your Budget

Home ownership will always be an exciting phase no matter your age and status in life. It won’t even matter if this is your first time owning a house or not. As one of your significant investments, one needs to make sure you’re capable of buying a home without breaking your bank.

This is especially true for homeowners wannabes who don’t have more than enough cash to pay for a house in full. It is critical for first-time homeowners to stick to their budget when buying a home. Here’s how to buy your first home without busting your budget.

First, Think About the 25% Rule

Experts claim that home buyers should keep the 25% rule in mind when setting up a budget. The 25% rules dictate that your mortgage should not exceed 25% of your monthly income. This way, you know that you’re able to pay for your monthly mortgage without sacrificing your lifestyle.

Lenders who offer Houston home loans will determine if you are capable of paying back their money on time. They do this computing your debt-to-income ratio. For example, the house you want to buy totals to $1000 monthly, and you have other expenses totaling to $1500. Your future total expenditures would be at $2500. If your monthly gross income is $5000, your debt-to-income ratio will be 50%. You have to reconsider your mortgage or better, find cheaper properties to increase your chances of buying a home that your lender will approve.

Consider All Other Expenses Aside from Your Mortgage

Owning a house is not as easy and as glamorous as it looks. There are lots of other costs apart from the upfront cost and monthly mortgage. Make sure you have the necessary budget for proper homeowners insurance, utility costs, maintenance, and repairs.

Good Read: 10 Facts You Should Know About Homeowners Insurance

Maintenance alone is no easy and cheap task. You’ll need to consider the investments you’ll be making to ensure your lawn is properly maintained and that your landscape is clean and healthy if the house you plan on buying has one. Unexpected repairs can also require a considerable sum of money, not to mention your HVAC system needs to be in tip-top shape for you to live comfortably in your new home. So, make sure to consider these expenses before you make the purchase.

Practice Living with Your New Budget Before Buying Your Home

Now that you’ve worked out all the expenses for your home including initial upfront cost, taxes, maintenance, and repairs, see if you’re up for the challenge of living within your new budget. Set aside your presumed expenses and saved them up on your bank account. By testing the waters even before you take the actual dip, you can experience how it will be like once you’re already living in your home and living using the remaining budget out of your monthly income.

What If You Can’t Afford Your Dream Home?

What if you’re disappointed with the house you can afford, or if you fail to succeed with your practice in living with your new budget? You have many options, and all you need to do is choose wisely.

Option 1: Postpone your home purchase and save up a larger down payment

Option 2: Buy a starter home, save up more money and sell that home until you can finally afford your dream home

Option 3: Buy what you can afford and renovate as you go by dealing with the possible hassles that may come along the way.

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