Most young Americans dream of the day they will own their own home. Unfortunately it isn’t as easy as it once was. Salaries are smaller, expenses are higher and good homes are more expensive. Does this mean that you give up on owning a home someday? Not really; if you know how to budget for a new home using a few clever tips and tricks you can buy the property of your dreams.
The first step is to identify the kind of home you want to own and where you would like it to be located. At any one time there are hundreds of thousands of homes listed for sale in America and they all comes with different terms and conditions. If you know what you want you will find out how much it will cost you and then you can start to save towards a definite goal. Once you have identified a home here is what you should do:
Find out how much you can save from your monthly income
You already have expenses every month so your new home will have to be bought based on how much you are able to save after those. You should create a spreadsheet that shows your income and every dollar that you spend. Whatever is left over is what you will use to pay off your mortgage every month, but don’t forget that you will also need money to do maintenance and keep your new home in good shape.
Cut down on expenses
We all have things that we buy every month that we can do without. Do you, for example, need to spend money on $200 bottles of wine when you can buy something cheaper that tastes just as good? If you are serious about buying a new home you should look at your expenses critically and cut out everything that you can do without. Every penny that you save will go towards paying off your mortgage – remember the faster you can pay it off, the sooner you will become a homeowner.
Get out of debt
This is probably the most important step towards getting yourself a new mortgage. All lenders look at your credit history before they can make a decision about whether or not to give you a mortgage. If you have any debt you will find it hard to find a lender and when you do they may offer you highly unfavorable terms. You should print out a copy of your credit report so that you can see all creditors that you owe. Start paying off your debts every month – if you cannot pay off a debt at once you can talk to the creditor about a payment plan and make sure that you stick to it. At the same time avoid taking on new debt – if you are planning to buy a home it is not the best time to take out new credit cards or buy a new car. Any new debt will be reflected on your credit report and will make it harder for you to get a mortgage.
Make sure that you have your down payment sorted out
One thing that many people forget when they want to buy a new home is that the higher the down payment you give your lender the lower your interest rates will be and the faster you will be able to pay off your mortgage. You should start to save for your down payments early enough so that when the time comes you can put down at least 20%.
Lastly, make sure that you are working with a reliable real estate company. They should be able to help you find a new home with minimum costs attached.