Purchasing your first home is a life-changing decision for many reasons, including the financial impact it may have on your day to day life and of course, the change of environment. When the time comes to move out of the apartment, to ditch the roommates or to leave mom and dad’s home, you may be looking for a place you can call your own, decorate in your own style and set your own rules. However, with the responsibility of purchasing a home arrives a list of costs and expenses such as the long-term commitment of a mortgage. When my wife and I bought a home a couple years ago, it took a few years of diligent planning. Planning includes not only savings, but also budgeting and forecasting. In this article, learn how to start budgeting for your first home.
Having a clear idea of the outlook of your cash flow is essential. Establishing a budget start with outlining your income streams and every single monthly outgoing with no expenses spared. It’s easy and straightforward to do, either on a piece of paper or on an excel spreadsheet. If you’re unsure of the lines, start by reviewing your bank statements. Budgeting also means planning. When would you like to buy your home? This date will determine your rate of savings. If you have savings available, you may also wish to use these to contribute towards a deposit. Armed with your realistic savings sum, consider the below potential costs to ensure your budget will stretch over the home buying fees:
- Deposit (Down Payment)
- Moving fees
- Private mortgage, Homeowners and Titles Insurance
- Property Taxes
- Legal fees
- New furniture and homeware
Once you have totaled the cost of moving to a new home, you will have a better idea of whether you can reasonably afford the property you desire on your income and savings. However, don’t feel too disheartened if your home buying days appear a distant reality. Besides adjusting your budget to your means, it will take discipline, consistency and patience.
Below is a great video by One Big Happy Life on easy steps to take on your way to home ownership.