Purchasing a house is no light deed; prospective home buyers and current homeowners looking to upgrade must put some much needed time and thought into their home owning decisions. Does that make signing up for a mortgage and purchasing a home an impulse buy? Absolutely not. It makes it one of the biggest decisions you’ll ever make in your life, and to make sure you can handle what comes after the initial purchase, you might want to follow these tips thoroughly and consider the following questions.
What’s your household income after the taxes have been taken out?
The trick here is the after part – we need the net income here, not the gross. That way, you can see how much money you genuinely have to spend on a mortgage. This will get your budget rolling. And, if you have any partners in this purchase like your significant other, family member, or friend, take into account their income. Add theirs with yours and see what you get.
Grab a pen and paper and make a list. What monthly expenses do you have to pay?
Think about the bills that you have – car, insurance, phone, utilities, loans, credit cards, and so on. Tally it all up and then add your extracurricular necessary expenses, like grocery shopping and student loan debt. Once you have the final number, you can compare it with your household income after taxes are taken out. How much money do you have left for a mortgage and house purchase? Do you need to start cutting back in certain areas of your monthly expense life?
Cut back on your fun spending.
Now that you know your income and have your necessary expenses laid out, it’s time to see what kind of play money you have and what you’re currently using it for. Check all of your accounts and see what you’re not using – cancel those to save a few extra bucks. Adjust the amount of money your spending on a weekly basis by not going out as much, not eating at restaurants as much, and not overindulging in purchases as much. Find areas where you can make cuts and implement them. Our suggestion? Stop shopping and spending large amounts of money on nights out, popular technologies like projectors, home improvement projects, and so on.
Pay off as much debt as you physically can.
Before you get super serious about buying a house, we recommend paying off as much debt as possible to relieve you of potential financial stresses down the road. The more money you have as a backbone, the better. Plus, it only helps your credit score when you have low debt on your current record.
Start saving for that deposit.
Deposits sometimes make or break your chance of getting the house you’re looking at. For example, if you have a 20% deposit and the next person only has a 10% deposit, but the rest of the particulars line up, chances are the seller is going to choose the person with the 20% deposit. It gives you the upper hand. Plus, it doesn’t hurt to pay off more of the house in the initial agreement, setup, and signing – only means you’ll have to make less mortgage payments down the road.
Don’t overbuy on any house you’re looking to settle into.
Think realistically. That means that if you don’t have the money to make your mortgage payments, keep walking and find a house that’s more affordable in your budget. The last thing you want to do is scrounge for money to pay your bills every month. And the last, last thing you want to do is lose the house you just confidently purchased.
Once you’ve done all of that …
You’re on your way to purchasing your first (or an upgraded) home! Be careful and pay attention to the tips, because they will come in handy – or use this as a reminder guide, just in case you forget a step along the way!
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Author of ProjectorTop.com