10 Ways To Get Your Personal Budget Fine Tuned Before You Buy A Texas
Purchasing a house is the biggest investment most people will make in their entire lives – so it is essential to not make it an impulse buy. Instead, research and preparation are key to the process.
Tips For Fine Tuning Your Personal Budget To Prepare For Buying A House
1. Determine What Your After-Tax Household Income Is
Figure out how much money you have. Use an income calculator online or your pay stubs and figure out how much money is left after taxes each month.
2. Make A List Of All Of Your Monthly Household Expenses
The next step is to list all of your monthly expenses such as utilities, bills, insurance, groceries and other extra items like tuition. The final amount that is left is the expendable income you have.
3. Figure Out Where You Can Cut Back
After you have a list of all of your expenses, check to see if you have any areas where you can make improvements. You might be spending more than you thought to pay for services that you are not using any longer or things like going out to eat.
4. Pay Off Your Debt
Although you can technically purchase a home when you have debt, it is a lot easier to get approved and manage your mortgage payments when you don’t have outstanding debt to worry about. It can also help to increase your credit score, which is an important determining factor when buying a home, to minimize the amount you owe as much as possible.
5. Save For Your Downpayment
Although the economy looks to be good, leaners still are being very cautious when it comes to lending money. Many will require a 20% deposit at least. So if you are buying a $150,00 house you would need $30,000 upfront. That might seem like a lot of money, but if you are able to focus your budget on saving towards your down payment, you can do it and it will help to improve your chances of being approved for a mortgage.
6. Purchase Realistically
If you end up buying a more expensive house than what you can realistically afford, eventually it will catch up with you. A majority of lenders recommend that you purchase a home that is about 2.5 times your yearly salary. Your total housing costs include not just the mortgage but other expenses as well like homeowner association fees and maintenance costs.
7. Get Pre-Approved
To give yourself the best chance, it is recommended that you obtain pre-approval from a lender before starting to look for a house. That way, when you are ready to put in an offer, the seller will take you more seriously since they know you are ready to move forward on the sale.
8. Hire A House Inspector
You should hire a house inspector who is separate from an appraiser that the lender requires. You want to do this in order to detect any potential problems that you might have to deal with later on. It will also help to protect you from having major issues before you own the property.
9. Before Making An Offer, Check The Market First
Check similar houses in the area before making an offer to ensure you are paying a fair price for the local market. If the property you are interested in is priced higher than other houses in the neighborhood that might a potential bargaining chip for you.
10. Buying A Home
When you take the time to fine-tune your finances, save for a down payment, and thoroughly research the market, it will prepare you to be able to confidently purchase a new home that you will enjoy for many years to come.