Thinking of purchasing your first home? Congratulations, that’s a huge step to take! While many people want to rush in and buy the first home they see there are a few financial things that you should think about before you purchase anything.
How much home can you actually afford?
This might seem like a no-brainer but you have to make sure you can actually afford your house. This doesn’t mean looking at how much money you have to spend but how much you can spend on a month-to-month basis. For example, if you have $1200 to spend on a mortgage you need to make sure you factor in miscellaneous expenses and regular expenses. Maybe you can afford that $1200 but you didn’t consider that your food budget brings it down to $800. The best thing you can do for yourself and your future home is make sure that you can afford it.
- Make sure you have a buffer
Staying on the topic of financials, ask yourself if you have a buffer for your home expenses. Because you are going to be a homeowner there are surprise expenses, like a car repair, that could creep up and ruin your budget. You want to make sure that at any given time you have more than $1000 in your checking account. In fact you’re going to want three to six months of living expenses in your accounts just to make sure that you’re covered in case of some unexpected event like being laid off.
- Know the other expenses
Buying a home isn’t just the cost of the home or the down payment. In fact there are a lot of additional factors that you should consider when approaching the cost of your home. Your home will need to be appraised, so there’s an appraisal fee, you need to also find out who will be responsible for the home inspection. Then think about what you might need for your new space – does the home need landscaping? Do you have the tools to mow the lawn or cut the hedges? What about furniture – do you have everything that you need? How about your moving costs from your old place into your new place?
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