6 Great Tips to Create Your Home Buying Budget
Buying a home is one of the biggest purchases a person will ever make, so it's very important to budget for it correctly. If you aren't careful with the budget, it's possible to get into a home that's not really affordable or be overextended and struggling if something goes wrong with a job. Naturally, it's not possible to plan for every eventuality. There can still be issues that come up. But rather than worry over every little thing, focus on protecting yourself as much as possible from the biggest concerns. That can make buying a home safer financially. Here are six great tips to create a proper home buying budget.
Consider What You Can Do On One Income
If you're a dual-income family, consider buying the home using just one income. It means you won't be able to afford a home that's as big or fancy, but it also means that if one of you loses a job the mortgage is still affordable. Ideally, qualifying to buy a home on only one income (the lowest one, preferably) is the right choice, but it won't work for everyone. Some people buy homes when they're single, or they may not make enough to qualify on only one income even if they're married or buying a home as part of a couple.
Look at Your Current Job Stability and Your Industry
When planning a budget, thinking about the future matters. There's no way to see into that future and be sure of what might happen, but keeping up with industry trends and how the current job market is going can help. Additionally, if there are problems at the company where a buyer is working, or if that buyer is having performance or other issues at their job, buying an expensive home might not be the right idea. Scaling back to a less expensive choice could help.
Get Rid of Other Debt First, If Possible
If at all possible, paying off other debt is the way to go. That avoids the problem of having a house payment and a lot of other payments, too. For people who can't pay off all their debt first, paying some of it off or paying it down to more manageable levels matter. It can mean qualifying to buy more house, but it can also mean being more financially secure and not worrying so much about how much is in the bank or where that money is going.
Buy When the Market is Low and Rates Are Good
This isn't always possible, but it can really help. Lower interest rates and a buyer's market can make a big difference when trying to purchase a home. Your budget for a house will go further that way and may allow the purchase of something that couldn't be afforded otherwise. It's worth waiting a while if the market or interest rates seem to be changing in favor of buyers. Of course, don't wait too long for a dip in home prices – if you want to get into a strong real estate market like Palos Verdes Peninsula, pulling the trigger on the purchase can help you avoid steadily increasing market prices.
Consider a Fixer-Upper but Beware of Serious Issues
Buying a fixer upper can save considerable money, but it can also mean a lot of serious problems. If buyers choose a fixer-upper because of a low budget, it's important to get a good home inspection and to be sure that they have the money and skills to get the house into better condition so they can enjoy their purchase instead of allowing it to add to their stress levels.
Talk With a Banker or Lender About Options
Even with a good budget and plan, talking with a lender is still important. This can show potential buyers where they stand when it comes to a home buying budget and give them ideas about how they can get a bigger budget if the home they want is still out of reach. It can take time, but may be worth it in the long run for the right house.