If you’ve been renting for years and are finally ready to take the next step and own your own home, have you thought about the different expenses you need to consider to hone in on how much mortgage you’re able to pay each month?
The first step is taking a long, hard look at your finances. How much money is coming in and how much are you spending? Whether you’re looking at just your own finances or if you have a partner alongside you, look at the total amount of money that’s coming in from your job or other sources, and come up with a list of your typical spend patterns. There are many budgeting tools that might help make this process a little earlier. You may want to sign up for a service like Mint.com which lets you connect your bank accounts and credit cards and it’ll automatically categorize your spending into categories. You can more clearly analyze priority spend such as grocery shopping and utilities and non-essential spending on clothing or entertainment.
Being honest with yourself is an important step when it comes to budgeting. Take a serious look at your lifestyle and determine how much you have been, and intend to, spend on non-essentials such as going out for drinks with friends, clothing shopping, and other related expended. Consider how much you’re willing to cut out. Most people aren’t going to be comfortable making extreme lifestyle changes in order to afford higher monthly mortgage payments, but most people would be willing to make smaller cuts here and there to balance their spending. Maybe you spend $2 each day buying coffee from a coffee shop before work each day. That’s $10 per week or about $40 per month. Small expenses like this can add up, but taking a close and honest look at spend may encourage you to change some of your habits.
In addition to looking at your current spending habits to better understand how much you can pay for your mortgage, you’ll also want to consider other expenses that come with buying a home. Don’t forget to factor in home insurance, utilities, HOA fees, and property taxes. While certain fees are expected and required, some aren’t expected and may come as a surprise. Sometimes, things happen such as plumbing problems, damages to your roof, a broken garage door, or mold. Most of these scenarios will require hiring an expert which can become costly. Yes, you can’t predict what will happen, but you should be realistic and be prepared to face unforeseen expenses.
Homeownership is a big decision and understanding your budget is one of the first steps. Once you’ve set a budget, consider starting your search for homes for sale in Copperfield.