You’ve decided that you are ready to purchase your first home. You’ve done your research, saved money for a down payment, and know where you’d like to purchase your first home. Overall this is an exciting time, but it is natural to still feel apprehension about the biggest purchase you’ll ever make. Making a mortgage payment every month is nothing to scoff at. Many first time buyers find themselves house poor after adjusting to their new home mortgage payments.
Here are some ways to assure that you can still maintain the lifestyle you’re accustomed to while living in a home you’re proud of:
Understand where your money is allocated.
Most likely your housing expenses are going to increase after purchasing a home. You will now be responsible for a mortgage payment, real estate taxes, homeowners insurance, and home maintenance. The extra money is going to need to come from someplace and it is recommend that you determine where the money will come from before moving into your new home. Take a look at your spending habits your spending habits and decide where you are willing to make a sacrifice. Perhaps you will eat more dinners at home, or cancel the expensive movie package with your cable provider. It is also possible that you decide you don’t want to make a sacrifice in lifestyle and decide to buy a smaller home or buy in a neighborhood where homes are more affordable. Whatever your decision may be, it is important for you to recognize where your hard earned money will be going and what you are comfortable sacrificing.
Make sure your mortgage payment does not exceed 40% of your net income.
This idea comes down to numbers. If you’re take home pay is $5,000 monthly, you should try to assure that your mortgage payment does not exceed $2,000. If your real estate taxes and homeowner’s insurance are not included in your mortgage payment, do not forget to factor that in as well. Taxes and insurance can add up to another several hundred dollars per month.
Don’t forget to factor in utilities.
Many homebuyers overlook how much their utilities will cost in their new home. Account for the size of the house and the type of heating and cooling it has. Inquire with your realtor about how much utilities can cost in a home this size and if there are any special circumstances with utilities in that given location. You can also ask the existing homeowners about how much their utilities cost monthly. Gathering this information before purchasing the home will help lessen any sticker shock when that first utility bill arrives.
Don’t overspend on new items for the house.
When you receive the keys to your new house it can be very tempting to going on a spending splurge. Naturally that garage needs a pretty new car to park in it and the furniture possibilities are endless. Resist the temptation of 18 months interest free financing on appliances and furniture. While it sounds very attractive in the store it is a quick way to increase your monthly obligations, and decrease your freedom of enjoying life outside the home.
Keeping perspective on how much homeownership costs is integral to being able to enjoy your home and the lifestyle you are accustomed to. Follow these steps to ensure that you can equally love your home while being able to afford it.