Budgeting Towards Homeownership

June 3, 2021

Transitioning from renting to becoming a homeowner is one of the biggest decisions you'll make in your lifetime. I'm here to help you plan ahead before you embark on homeownership by getting a budget in place and ensuring you have the savings ready!

Some of the costs of embarking on homeownership include a down payment, closing costs, ongoing home maintenance, property taxes and monthly utilities.

The key to ensuring you are prepared to home ownership is to create a realistic budget based on your goals and your purchasing timeline. Track your spending and make your dollars go further by sticking to your budget once it's in place. Setting aside your down payment and closing costs are crucial to getting a final approval in place for your mortgage financing.

Examine all areas of your life from entertainment to the type of food you buy, where you buy your food and clothes, and how and where you travel. Also look at your spending personality and make necessary adjustments. Are you a saver, a splurger, a spontaneous shopper or a hoarder? Become smarter with your money and avoid impulse buying.

If you find you’re spending a lot of money in one area, such as entertainment for instance, set aside a reasonable amount each month and prepare to stop spending money in this area once your budget has been exhausted.

Budgeting provides you with the opportunity to re-evaluate your needs and wants.

If you can set your budget solidly in place before you head out home or mortgage shopping, you will be far more prepared to purchase your first home.

Following are three top tips to help you prepare for the purchase of your first home:

  1. Set up a savings account. You can automatically have a predetermined amount deposited into a savings account each pay period that can be saved away for your down payment and closing costs, as well as help with your ongoing homeownership expenses after you find your new home.
  2. Save up for big-ticket items. As you accumulate money in your savings account, you will be able to also save for specific purchases to help furnish your home. Avoid buying now and financing any big purchases as these will have a negative impact on your mortgage financing.
  3. Surround yourself with a team of professionals. When you’re getting ready to make your first home purchase, enlist the services of a licensed mortgage professional and a real estate agent. These experts are invaluable to you as you set out on the road to homeownership because they help first-time buyers through the home purchase and financing processes every day. They will be able to answer all of your questions and set your mind at ease. A mortgage professional has access to multiple lenders, and can help you get pre-approved for a mortgage so you know exactly what you can afford to spend on a home before you head out house hunting, while a real estate agent will be able to match your needs with a house you can afford. Both parties will negotiate on your behalf to ensure you get the best bang for your buck. And, best of all, these services are free. They will also be able to refer you to other reputable professionals you may need for your home purchase, including a real estate lawyer, home inspector and home appraiser.
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