Owning a home is the dream of many hard-working Americans. The chance to make a house a true home and finally set your own rules is an attractive end-goal. However, without the right plan of attack, that dream can quickly become a nightmare. One of the most common mistakes people make is not taking the time to calculate their home buying budget. Unfortunately, when they find out how much they can really afford, it's simply too late. Debt has been accumulated, and a possible foreclosure may be in the near future. Thus the following includes the steps you need to take to properly calculate your home buying budget.
Determine Your Monthly Income
The first and often easiest step to determining your home buying budget is to simply sit down and add up everything you bring in per month. This includes your paycheck from work and any other additional money that you make per month. For example, if you earn money from rental properties or the stock market, you may want to add that into your total sum as well.
Examine the Details
Real estate experts, such as those at John Hook Team: KYRO Real Estate can use their experience to help you work through the details of what you can afford. They will give you the information needed to see how much you will pay each month for the property. After meeting with an experienced real estate agent, you will know expenses such as annual property tax, cost of home insurance, estimated mortgage interest rate, and the loan term. You will also want to add in the amount of money you are going to put down for the property into the equation.
Consider Your Expenses & Debts
The last step to calculating your home buying budget involves adding up all your monthly recurring expenses and any debts you may have to your name. In terms of expenses, you will want to add every single detail. Why is this important? Because although a recurring bill of $10 won't collapse your home buying budget, 14 or more of those can. This is why it is so important to include everything from your internet bill down to your gym membership. Lastly are all of your debts. Paying down debts is difficult enough; now add a monthly mortgage to that, and it can be downright impossible. Be sure to stay organized and avoid accumulating extra debt as much as possible.
By taking the steps listed above, you may be able to get as close as possible to your home buying budget. However, it is always recommended that you speak with a real estate professional before investing your hard-earned money.
