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How to Create A Home Buying Budget

Friday, May 17, 2019   /   by Harvey Rosenberg

How to Create A Home Buying Budget

Buying a home, whether it be for the first time or your third, consider setting up a budget to know not just how much home you can afford with monthly payments, but how much does buying that home cost at the start. Here are some things to consider to create a home buying budget. 

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Up Front Costs

Buying a home is more than just a down payment. Set aside money for additional costs such as home inspections, title fees, moving expenses. Additionally, if you're selling a home, you may need to make some improvements before listing or after negotiating. And moving into a new home may come with additional repairs or cosmetic changes to make the home your own. 

Be sure to talk to your realtor about upfront costs. Set a reasonable budget for any changes you may need to make as well. Just like on the home improvement shows, buying a home for less may mean you get to do more improvements that are within your budget. 

Down Payment

Before you buy, save for your down payment. It is possible to buy a home with little to no down payment, however, you'll get more bang for your buck if you can get close to 20% of the cost of the home or more. 

With a 20% down payment, your overall monthly payments are lower because you have less loan to pay off. Additionally, you'll avoid PMI (private mortgage insurance) which also lowers your monthly payment. 

Plus, you'll likely get a lower mortgage rate, meaning you'll pay less in interest fees over the life of the loan. 

Monthly Expenses

It's a great start to use the mortgage calculators to figure out your monthly payment, however, it does not end at just the cost of the loan. If you have PMI, add that in. There's also HOA fees and property taxes to consider. Finally, you should also set aside a comfortable amount for home repairs.   That is your true monthly expense. Be sure to factor that in when figuring out the cost of a new home.

Need help figuring a realistic home buying budget? Contact us to speak to one of our experienced agents to set you on the right path to home ownership. 

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