Many renters long for the day when they can get the key to their new home. Believe it or not, buying a home is quite attainable for many people if they simply adopt a plan and stick to it. The following guidelines will help if you are considering moving out of a rental agreement and into a permanent home.
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How Much Can You Afford Monthly?
This seems like an obvious question, but it has quite a few layers in the answer. If you are currently paying a certain amount in rent without any financial stress then you should be able to continue paying that amount on a home. However, a home has more than just a loan payment. There are also things to consider such as home owner’s insurance, property taxes, home maintenance and home repair. You should talk to some friends and real estate agents and get some estimates for these amounts in order to determine your budget.
Regardless of the condition of the home, at some point or another there will be a major repair that you need to pay for. It could be a new roof, a worn out furnace or any of a number of other things. Keep these things in mind when looking at your figures.
How Much Can You Save?
In order to buy a home you will likely need some money for a down payment, earnest money and closing costs. Depending on the type of loan you get and the price of the home this amount can range from $3,000 to $10,000 and even more. Look at how much you have in savings now and how much you think you might need. An experienced mortgage broker can offer some insight as to how much you will potentially need in order to get into a home.
How Can You Cut Costs?
Now that you have a savings goal, how can you reach the mark? First, look for items that you currently purchase and determine what is necessary and what is indulgence. If you have an addiction to expensive coffee or soft drinks, consider cutting back or deleting these items all together. The same goes for monthly items like cable, internet, and cell phone bills. You may be able to negotiate a better deal with your current provider and stash away some money in the process. Consider a different place to rent. If you are renting in an expensive area of town then you may be able to save $100 or more per month by moving to a more affordable place and saving the difference.
Buying a home can be done with a bit of planning and hard work. This type of work will have a payoff that can last for years to come when you are reaping the advantages of owning your very own home.
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