You know that buying a home is a big decision. Pondering this important step, how do you know if it is the right one?
Unfortunately there is no easy way to know. However, by taking a look at your financial situation, you can save money to reach this goal of a new home. Here is some advice on how to shoot for this goal, as well as knowing if it is the right time.
How Much Can You Afford?
You can start a savings plan to work towards a new home. Even if you are ready to start looking at mortgage options, it is wise to work through the numbers, as well as the variables, to see if you are truly ready.
- Play with the Numbers
Around the Internet you’ll find a wealth of calculators to help you through the down payment, mortgage payment, and numbers surrounding the purchase. Use a mortgage calculator to see if these will break your budget.
With these projections, perhaps you will have a basis by which to plan your savings.
- Variables – Provide a Cushion
Whether you are saving for a home or determining whether you are ready for the purchase, use a cushion. This is actually a good idea for any major purchase, as you must be financially prepared for these factors.
Interest rates, down payments, and miscellaneous fees will need to be accounted for in your research. While providing a cushion might lower the number of what you can afford, it will provide a safety net and perhaps be more accurate. Tight margins can break your budget rather easily.
Can You Really Afford a Home?
While this is not meant to be a scare tactic, it is vital that you look into the costs that come with buying a home. Yes, we did just do that – but there is more.
Apart from mortgage costs, including the down payment and other variables, there are more costs. Repairs on the home could be immediate, utilities could be much more than where you currently live, and you could have to account for furniture, for instance, to be placed into the home.
Property taxes, homeowner’s insurance, the price to keep your lawn green – there is a lot to consider. It would be wise to create a budget that you can direct your savings to – there is much, much more than the numbers you find on the mortgage calculators.
Start Saving, Targeting, and Planning
Preparing to purchase a home – whether this month or not even this year – is a process.
Look at how you would like to save for your home purchase. Liquid savings accounts, term deposits for an effective long-term strategy, and other options are available.
While you are making room in your budget for your future home, keep planning. There is much to say about working out projected numbers on a worksheet, with the costs of buying and owning a home. Not only will this give you insight to the amounts of this purchase, it will give you peace of mind and help you research further.
Finally, targeting will be something else that you will have to approach. If the market is terrible for home, perhaps another six months on your apartment is best. The real estate market, specific homes, and mortgage rates, as well as others, can be targeted to turn this purchase into the best one for you.
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Category: Frugal Living