Preparing to buy a home requires time and dedication. It’s likely the biggest purchase you’ll ever make and a significant financial investment. Many homeowners make the mistake of not budgeting properly before a purchase and find that keeping up with monthly mortgage payments and related costs is more difficult than they anticipated. It’s more than just saving up for a down payment, so keep the tips below in mind if you’re preparing to make a purchase.
3 Budgeting Tips for Preparing to Buy a Home
1. Know How Much You Can Afford
The foundation of your budget is knowing you can afford your mortgage payments without going broke. As a rule of thumb, multiply your annual estimated salary (ex., $100,000) by three and four. The results ($300,000–$400,000) will give you a range of what priced home you can afford. You can also add up your monthly debts and required payments and multiply them by 25% to gauge what type of monthly mortgage payment you could afford if you buy a home.
2. Don’t Forget Property Tax & Insurance
Many people land on a mortgage payment they feel comfortable with but are surprised when it suddenly jumps because of property taxes and homeowner’s insurance payments. Property taxes are taken by your local government based on their assumed value of your home, so the cost varies. Do research to figure out estimated taxes and insurance costs so you can get an accurate idea of the true amount of your monthly expenses.
3. Remember Homeowner Costs
When you buy a home, you inherit a variety of new responsibilities. As a renter, you may have been responsible for basic utilities. As a homeowner, you take on all expenses, ranging from sanitation and lawn care to random short- and long-term repairs. Even if a home is in great shape, anticipate possible expenses down the road so you know you’ll be financially prepared if they occur.
Lawrence Realty Inc. has helped residents of Red Wing, MN, with real estate transactions since 1948. Whether you’re looking to sell or buy a home, purchase an investment property, or find your dream home, their real estate agents are committed to helping you achieve the best results. They’ll work with you every step of the way so you can be confident you’re making a sound purchase that will pay off over the years. Call (651) 388-4745 today to speak with a real estate agent, and visit their website and Facebook page to learn more about the agency.