By: Jerika P – i-Lead Realty Social Media Manager
Making a realistic budget for your home purchase is a crucial first step in preparing your finances for home ownership. The following are crucial guidelines for setting a home-buying budget.
1. Analyze your budget for a property purchase
By dividing your annual gross income (before taxes) by 2.5, you can roughly determine a home’s acceptable price range. When determining how much you can afford to spend on a home, you should also take credit, mortgage rates, and home-related costs into account.
2. Determine how much you should put down for a down payment
Depending on the type of mortgage and your credit history, your down payment will be between three and twenty percent.
3. Make a deposit for the closing charges
You must set aside funds for closing costs in addition to the down payment. The seller may agree to pay some of the closing fees on your behalf, but often the buyer is responsible for all of them.
4. Account for new and ongoing expenses
There will be additional expenses when buying a home. Depending on your situation, you should prepare initial expenses such as moving budget, furniture, paint and appliances.
5. Calculate a budget and start saving
Most lenders agree that you should spend no more than 28% of your gross monthly income on a mortgage payment (including principal, interest, taxes and insurance) and no more than 36% on total debt (such as your mortgage, student loans or credit cards). Remember to plan a budget for your daily expenses such as food, shelter and transportation.
We know figuring out a budget can be intimidating, that’s why we always recommend finding a real estate professional. If you are searching for a Real Estate Professional or would like to learn more, you can contact us here.
Are we in a housing bubble? Here’s what some of the most successful realtors in the country say. Watch the video here