5 Expert Tips for Creating a Homebuying Budget

Are you planning on buying a home? Having a homebuying budget is essential to keep your finances healthy. Read this post by Patriot Title Agency in Columbus to learn how to make a budget to buy your new home. 

Determine How Much You Can Afford

Whether you're buying your first home or have experience in real estate, it’s a process that can become overwhelming quickly. That’s why one of the first steps you should take when buying a home is to have a homebuying budget. Knowing how much you can afford can inform many decisions in the process, like knowing what neighborhoods to look at, looking and mortgages, and many other things. It can also help you negotiate best without putting your finances at risk. Keep reading to learn more about how to put together a budget that works for you.

If you’re in the process of buying a home, it’s essential to have a homebuying budget and a great home-buying team. If you don’t have a title company yet, call Patriot Title Agency Inc. in Columbus at 330-479-3000 to speak to one of their agents and learn about the services offered, like title insurance.

Follow The 28% Rule

Making a homebuying budget is unique to each person, as each of us has different financial situations and responsibilities we need to take into consideration. But even if each budget will look different for everyone, the 28% rule remains one of the most accurate ways of budgeting for a new home. The 28% rule states that you should only spend about 28% of your monthly income on housing expenses to keep your finances healthy. This 28% includes everything home expenses related, like:

• Mortgage payments
• Property taxes
• Mortgage Insurance
• Homeowner’s Insurance

Keep this rule in mind to keep your finances healthy in the future and not overextend your spending capacities.

Plan Your Downpayment

The next step in our homebuying budget is planning for a down payment. Saving for a downpayment is one of the most important steps when buying a house. A down payment is usually 20% of your home’s total cost. Putting down a sizeable downpayment can help you have comfortable mortgage payments and have less strain on your finances. It can also help you pay for your property faster and increase your return on investment.

Make your real estate transactions easier with an expert title company by your side, like Patriot Title Agency Inc. Call them today at 330-479-3000 and let one of their agents walk you through all their excellent services.

Fully Understand Your Mortgage

Another essential part of your home-buying budget is understanding your mortgage responsibilities. It’s important to consider this as the payments will be a recurring expense for the following years. It’s crucial that you understand fully what your mortgage payment entails before you sign any paperwork. It’s also important to avoid overextending your finances. Mortgage tip: Sometimes, lenders will offer to lend you more than you can afford. If this is the case, remember your spending cap and stick to your budget to keep your finances healthy.

Factor in Closing Costs

Closing costs are an aspect of buying a home that sometimes people overlook when creating a budget. Closing costs are lender, title, closing fees, and escrow charges that each real estate transaction goes through. These are usually 2-5% of the purchase price of your home and will vary depending on where you buy your new property. Remember that these costs should be disclosed and discussed before closing.

Have an Emergency Fund

Lastly, your budget should include an emergency fund to cover unexpected expenses that come with owning a house. This fund can help you cover things like repairs needed before moving in or others that might appear once you’re living in your new home. A rainy day fund is an excellent way to be prepared for emergencies, and factoring it into your budget can save you many headaches. Having an inspector look at the property before closing is also a good idea. This way, you can negotiate if the seller can address some of those repairs as a part of the closing process, or you can get them to lower the asking price and repair them yourself. Either way, by having an inspector look at the home, you’ll have a clear idea of how much you’ll need to spend, and it won’t catch you by surprise.

We hope this post helps you create a budget that works for you. If you have any further questions about title searches or title insurance, don’t hesitate to call Patriot Title Agency Inc. at 330-479-3000, and a friendly agent will help you out in no time.