If the time to buy a home has finally come, there’s one aspect you can’t forget: the budget. Here, get tips to make your dream home a reality before browsing houses for sale in your preferred area. The right practices not only give you the cushion you need for your down payment and mortgage costs, but they also teach you to be more conscious about how you spend.

How to Budget for Your First Home

1. Determine the Monthly Cost

Calculate how much it will cost you to live in the houses for sale you’re considering. As a general rule, your mortgage should be about 25% of your gross income. Add up the monthly mortgage rate, homeowners insurance premium, state property taxes, and energy bills.

Compare that amount to your debt to income ratio while keeping other household expenses, such as home repairs and renovations, in mind. Remember, if your dream home needs serious repairs, have the seller pay for them or lower the asking price.

2. Trim Financial Fat

See where you can save money, such as forgoing weekly trips to the salon, cooking at home instead of ordering takeout, and having friends over for game nights instead of going out to bars and clubs. Consider taking credit cards out of your wallet since it’s easier to overspend with plastic instead of cash. And while you can still indulge, remember that you’re saving for a big investment when you feel tempted to spend.

3. Set Up Automatic Banking

Let the funds flow from your checking to your savings account when you set up automatic deposits. Determine a set amount you want to save every week, two weeks, or month, so you’re constantly gaining interest instead of forgetting to transfer funds. If you’re an independent contractor or have a variable income, come up with a savings number that won’t hurt your savings, even when you make less.

4. Don’t Forget About Unrelated Expenses

Give yourself room to accommodate unforeseen repairs and other costs, such as those surrounding holidays and family member birthdays, college loan payments, and retirement funds. Estimate what you can expect to spend in the coming year and add it to your previous expense calculations for a working idea of how much homeownership will cost. 

Browse houses for sale through Lawrence Realty Inc. The locally owned, third-generation family business has served Red Wing, MN, and the surrounding areas since 1948, matching buyers with their dream properties and staying active in the community. Call (651) 388-4745 today to make an appointment or view houses for sale online first. Get more buying tips on Facebook.