Buying a house is a huge milestone for a lot of people. While it seems like a fun and exciting process, a lot of work goes into it all. Make sure you are prepared for the journey ahead by following these key steps:
STEP ONE: Determine how much you need
It’s typical to pay a 20% down payment. There are some government-backed loan programs, that will allow you to secure a loan for less, and we can discuss those options during the mortgage process!
To know how much the amount will be, you need to know the size of the house first. Check out the below questions to help you figure out how much house you may need.
How much will our lenders loan you?
- Our lenders will typically approve you for a specific loan amount before you even start looking for a house. One of the first steps in your mortgage process should be to understand how much you can be approved for, so you know the budget frames you should stay within.
How much house can you afford?
- Make sure you look at your budget to see how tight your finances may be. You’ll want to remember that there are more expenses than just the monthly mortgage payment that goes into owning a home, like utilities and home repairs.
What will closing and moving costs look like?
- In general, closing costs will cost between 2-5% of the house’s purchase price. Make sure you are also prepared to pay for:
- Homeowner’s insurance costs
- Property taxes
- HOA fees
- Any fees to open new utility accounts or to move your existing accounts
- Moving expenses
Calculating these expenses will give you a more accurate idea of exactly what you can expect to pay when you purchase your new home.
STEP TWO: Understand where to keep your money
If buying a house is something that will be happening soon, you’ll want to keep your money in the right place. It’s best to keep it in a place where you know it will be easily accessible when you are ready to officially buy your home. The two best places to keep money tucked aside are in a high-yield savings account or a CD. We are happy to discuss either of these options for you!
STEP THREE: Start saving up
Housing expenses can and will add up quickly. It’s best to start saving for a house as soon as you know you’re ready to buy. If you’re ready to start building your down payment, try some of these tips:
Analyze your food spending
- Spending money on food is one of the many things people don’t realize they overindulge on. Food is a necessity, but there are ways to make sure that it doesn’t break the bank:
- Eat out less
- Look at how much food you waste
- Start meal planning
- Shop in your cabinets before you prepare your grocery list and meal plan
Look at money-wasters
- Take a good look at where you’re really spending your money, to try and decide if it’s necessary or not. For a month, try to write down every purchase you make. This will help you evaluate what you could be saving on.
- Cut unnecessary expenses. You’ll need to be honest with yourself on this one. Look at the monthly expenses to see what you can eliminate that will help save you money in the end.
Try out a new source of income
- Another source of income is never a bad idea, especially when you’re trying to save up for a house. It could help you out a ton! Put those extra funds aside, you’ll be surprised how fast they add up!
STEP FOUR: Figure how much you can afford
To determine how much house you can afford, use our online mortgage calculator to figure out what your monthly payments would be! Mortgage calculator: http://usa-mortgage.com/calculator