You dream of owning a great home to suit your taste and needs. However, this may have to cost you quite a lot of money. It therefore means that there will be alterations in your current spending or savings. Well, the way you will budget for a new home is dependent on several factors. It will depend on whether you are planning to own the first home, meaning you want to move from a rented house to your own home, or if you want to move from a first house to a dream home.
Whichever level you are at, there are several factors that will determine how much you budget for a new home. These factors include;
- Your earning– It could be your personal earning, or yours and that of your spouse if you plan to jointly buy a home.
- The Location of your home – Where exactly do you want to live? Some estates are more expensive than others.
- The size of your dream home- This may also include the size of the house as well as the land on which the house will sit on.
- How long you want to pay for it – If you want credit for a shorter time, then you may have to choose a cheaper home and vice versa.
After considering these factors, then it is time to come up with a real budget for your home. Remember that it is your own home, a treasure for yourself to take pride and find comfort in. Therefore, take time to budget for the best. Below are basic steps towards getting a perfect budget for your home:
- Get informed
Be sure to visit a real estate and property development company, to get the available options in terms of different properties available in the market and their value as they have a better understanding.
Decide the exact day that you want to move to your new home. Do not wish for a particular time span when you want to move to the new home, say like in the next three months, but rather set a specified target date.
- Calculate how much you can afford
Use a mortgage calculator to determine exactly how much you can afford to pay monthly.
If you are cost sharing a mortgage;
- Open a money market account or an alternative of a high-interest savings account. Ensure the Federal Deposit Insurance Corporation guarantees your money.
- For every month, deposit the total money (two halves if you are two) to the savings account monthly. Deposit the money until the date for moving in is due. Spend the money to pay for your new home.
- Reduce your spending
In order to do this, you need to be realistic by spending less than you earn. Make a plan and stick to it. For example, you may realize that you don’t need to live in that two bedroom apartment especially if you don’t have kids. Therefore moving to a one bedroom apartment may save up to around 30% of your expenses which you could channel towards home ownership.
- Increase your earnings
While most people believe in spending less to save, I think working that extra job is a sure way of increasing your savings. Take up any money making opportunity that comes your way. You could also opt to get a second job as a side hustle to top up your main source of income.
To succeed in owning a new home, you may have to forego some expenses, however small they may seem. These may include your daily cup of coffee which may cost $5 but accumulates to $150 in a month.
As much as you are looking towards owning the best home, be careful so that you do not strain so much that you will have to compromise on basic needs such as food.
While owning a home may seem a hard process that requires a lot of sacrifices, at the end of the day, it is worth it, so go for it!