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How to Budget When You’re Buying a House

The decisions that you are required to make when buying a new home can be easily overwhelming. Simple choices to make like: city or country? Fixer-upper or move-in ready? Brand new or existing? The list goes on! A home is definitely a big purchase and you don’t want it to be a burden rather than a blessing eventually.

It’s not rocket science to save up money when buying a home. Here are some few tips to keep in mind:

List all your income.

It’s nearly impossible to make a budget if you have no idea how much you can spend. You have to really sit down and add up every source of income you receive each month.

List all your household expenses.

The next thing to do once you’ve figured out how much your joint income is in a month, is how much you spend each month. Every monthly expense should be held accountable, be careful not to miss out on anything.

Know home-ownership costs.

Once all that’s settled, it’s time for the most important step – knowing the cost of owning a home. If you can’t afford to pay cash for your home, it’s best to keep your mortgage payment to no more than 25% of your monthly take-home pay. This should include property taxes and home insurance. Of course, budget for maintenance and repair, lawn care, furniture and décor should also be considered and listed down.

Give your budget time and room to grow.

Even when you’ve got everything all planned out, life happens. Before you get tied to a mortgage, consider all other events in your lives that might increase your living expenses as time passes. Think about having kids, sending kids to school, etc.

Make the necessary adjustments.

Once you’ve sorted out all the expenses and income, both short-term and long-term, it’s now time to make due adjustments. It is easier said than done, but if you want to have a worry-free life, you should make the changes even before getting a home.

Have a firm price limit and a list of “must-haves”.

Before completely diving in, you should already have made a firm decision as to the price range that you will be having when choosing. It’s also a wise decision to keep a list of things or amenities that you would want to have in the house you would be choosing. This way, you won’t go off your budget.