Buying a home is not easy. Sometimes, you have to save towards it for a long period before the dream can become a reality.
To make sure you don’t run out of money before you get your keys, it’s important to create a budget. But where do you start?
In this post, we will share Jacques Poujade’s real estate tips on how to budget for buying your own home. These tips are so simple and work well for beginners.
Choose a city you want to live in and budget a month for housing. This should include the mortgage payment, all costs related to it, insurance and maintenance.
Then, make a list of all your monthly debts such as electricity, water, internet and utility bills among others. Include these costs in your budget.
Now, think about your budget. Will you get the money for everything you need? For example, if you plan to buy a mansion, will you have enough to buy it? If not, will this be something that can wait for another six months? If not, start looking for a cheaper home or buy a smaller one.
Make a List of Monthly Household Expenses
Create a list of your monthly expenses. Include all housing-related costs such as rent, mortgage payments, property taxes, insurance and maintenance. Then, make a list of all your other expenses such as clothes, food and public transportation.
Now that you have a list of your monthly income and expense, it’s time to calculate your personal income that you can save towards getting a home. This will help you to have a clear idea of how much you can spend.
Figure Out Where to Cut Back
Look through your list of expenses and try to find ways to reduce them. It’s important to think about the costs you can save such as if a friend is willing to share your internet connection, eating at home instead of buying food outside and so on.
If you have much more than the average cost, it might be better for you just to get a smaller home. You’ll only have to live there until you save up for your dream home anyway.
Save for a Deposit
You have to save up for a deposit for your home before you can actually buy it. If you don’t have enough money, you will have to start saving and then pay only the deposit.
The amount of your deposit should be at least 20% of the price of your home. Some people choose to save for 30% to prove that they are serious about buying a home.
If you have a lot of expenses, try to save as much as you can. Start by money-saving tips such as using public transportation, getting coupons and buying products in the grocery store that are on sale.
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Save to Hire an Inspector
After you have saved enough money for your deposit, you can start looking for properties. When you are searching for homes, hire an inspector who can tell you about the condition of the house.
As a seasoned real estate investor and mortgage expert, I couldn’t stress enough the importance of hiring an inspector. An inspector can give you advice on how to fix it up or renovate it so that it is easier to live in. The price of this service depends on your location and the quality of the inspector.
In short, when you are planning to buy a home, save to hire an inspector so that he can tell you about its condition.