If this is your first time buying a home, then you’re likely feeling a bit overwhelmed. There’s the issue of interest rates, which seem to fluctuate by the week. Then, there is the matter of securing a home loan. How much home can you really afford? A mortgage loan specialist can help you understand the basics of home loans, but you first may consider how you’re going to afford new monthly payments.
We put together four tips when you’re budgeting for your first home mortgage:
1. Itemize each and every dollar
Many find that monthly budgeting fails them because they do not account for every dollar that comes in the household. Determining your basic necessities is only the beginning of budgeting, especially when you’re a first time home buyer. Be sure to consider accounting for miscellaneous expenses, which may include sporadic road trips, electronics, and nights out.
Realistically speaking, you should probably stay away from expensive dinner dates and unplanned vacations when trying to buy a home. Remember that homeownership is a big investment with a significant impact on your budget. Spending money you don’t need to is the best way to find yourself in a financial bind a few months after buying your first home.
2. Start with the most important categories
The Four Walls (food, shelter, clothing, and transportation) are essentially what you need to sustain yourself and the family. These four elements should be at the top of your budget with housing being first. Then, after securing the Four Walls, you can focus on everything else. It’s always a good idea to save at least ten percent of your income for emergencies. You may find as a first time home owner that putting aside five percent of your income every month is more feasible. Just do what feels right for your financial situation.
3. Pay off your debts
Typically, you don’t want to seek new debt while having lingering debts. Using the snowball method of paying small debts is usually the best way to build confidence to tackle bigger bills. Paying your off your phone bill, for instance, may be just the thing you need to take control of the money you owe for your car. It’s best to enter into a new mortgage agreement with as little debt as possible.
4. Create a payment schedule
It’s easy to create a budget and forget about it. Creating a schedule for monthly payments will help you stick to what you’ve established. Setting up automatic drafts from your checking account is a great way to ensure that the Four Walls are always taken care- on schedule. You may even consider buying your groceries on a set day every week so that the routine is further solidified. Remember to try and stick with the amount that you said you would when spending. It makes no sense to have a budget that you ultimately fail to follow…be realistic from the start.
The home buying process can be a long journey for some, so don’t feel discouraged when you’re figuring out your new monthly budget.
Click here to learn about other ways you can prepare for buying a home.
Our expert can help you understand the basics of budgeting so you can ultimately get the mortgage that you want. Contact our team to learn more about qualifying for your home mortgage.
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Preferred Mortgage Corp. of NY is a mortgage broker located in Rochester, NY.
We provided mortgage services throughout New York State including Rochester, Buffalo, Syracuse, Albany, and New York City. We’re also licensed to do business in Florida. Click here to contact us about our mortgage services today. Preferred Mortgage Corporation of New York – NMLS # 44812 Registered Mortgage Broker – NYS Department of Financial Services & Licensed Mortgage Broker Florida Office of Financial Regulation Loans Arranged Through Third Party Providers