Buying a home can be a large expense that some believe they can’t afford. Creating a budget is where a homeowner sets themselves up for financial success. When buying your first home, you may not know where to start, which is why we’ve created a step-by-step list of how to create the best budget plan for you for successful homeownership.
Figure Out Your Income
You can’t properly determine where your money should go if you don’t know how much money you have. This brings us into the first step of collecting all of your income means and calculating what they total on a monthly basis.
If you have income that isn’t a predictable amount, aim on the lower end to avoid budgeting for an income you may not accrue.
Next, you will want to calculate your current bills that you have each month. This may consist of numerous categories such as your current mortgage or rent payment, utilities, cell phone, gym memberships, etc. Whatever you pay for each month you’ll want to include within your budget.
You’ll also want to set aside an emergency or miscellaneous part of your budget for means that may be unexpected or that don’t occur monthly.
Home Owning Costs
This is the step that helps you understand what you may or may not be able to afford when looking into buying a new home. Utilizing a house payment calculator will simplify this step and do all of the work for you. This calculator will take your current monthly debts with the down payment you are expecting to pay into consideration to determine a price of a home that fits your means.
After having a general idea of where your budget lies you will now want to begin saving for an emergency fund. When buying a new home unforeseeable costs tend to come up such as repairs or wanted upgrades to make the home your own.
Not only are emergency funds good to have in the beginning stages of owning a home but also as years pass and updates are needed.
Lastly, after completing your budget plan and utilizing it, this shouldn’t conclude the budgeting process. Regular reviews are wise to complete at least annually or if there is a significant change in income or expenses.
Staying on top of your expenses will not only assist you in managing your money efficiently but will also lead you into better saving habits and potentially paying off your home at an earlier time than expected.