How to Make the Most of Your Home Budget

Uncategorized
October 26, 2021

The process of buying a home can be stressful financially. The best way to approach this process is to create a budget, and make the most of it! The cost of buying and owning a home is filled with a lot of nuance. Take a look at these tips to make your budget stretch:

Create a Realistic Budget

Before your budget can stretch, it needs to be realistic. Typically, your estimated mortgage payment should not exceed 28% of your gross monthly income. This includes principal and interest, as well as taxes or home insurance. In total, you should have no more than 36% of total debt, including your mortgage and student loans.

Factor in all the Costs

To get the most out of your budget, you need to be prepared for all of the expected costs. You can get a rough estimate of what you can afford by multiplying your gross annual income by 2.5. However, you need to consider your credit score, as well as the mortgage rates and the home related costs like a down payment. You must also plan for the closing costs, which are a percentage of the purchase price of the home.

Plan for Ongoing Expenses

There are more factors that contribute to the cost of your home besides your mortgage payment. While the initial expenses are things like moving costs and furniture expenses, there are other ongoing expenses to consider. The ongoing expenses of your home will be things like interest rates, property taxes, and HOA fees or homeowner’s insurance if applicable.

Stay Within Your Budget

The best way to stretch your budget is to be realistic and plan ahead. Without proper planning, you may be blindsided by the additional costs of home ownership.