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It’s not uncommon to feel overwhelmed when you’re buying a house, especially in a city like New York. Buying a new home is a serious milestone that involves making a lot of decisions.
If you want your big home buy to be a “soul changer,” there are seven budget steps we recommend to prepare you for surprising costs like appraisal fees, taxes, and private mortgage insurance.
A simple process like an affordability calculation will help you fix a budget for buying a house. With a clear understanding of a budget, you’ll have a less stressful outlook of the entire process.
So read on and save yourself an unnecessary headache!
How to Make a Budget for Buying a House
For more financial confidence, it’s important to customize a strong personal budget. Here’s how.
1. Keep up with Your Taxes
No one likes taxes. But if you love a house that’s for sale in Queens, you have to calculate the amount you will pay on property taxes.
All you have to do is take the home’s assessed value and multiply it by the tax rate. Also, even before you buy, make sure to check how much money you have left each month after taxes.
2. Say Goodbye to Debt
Although you can buy a house with debt, it’s no easy walk to handle mortgage payments when you’re already worrying about long-awaited debt.
If you begin to pay it off, your credit score will improve. And that will make it easier for mortgage lenders to choose you based on a spotless score.
3. Write Down Your Monthly Household Expenses
It may sound painful at first, but taking a look at your entire list of expenses like groceries, insurance, and utilities will help you determine a better budget plan based on your expendable income.
And did you know cutting your power bill is easier than you think? Read more about that here.
4. Make the Cuts You Need To
With an expendable income, you’ll be able to look at unnecessary purchases. Make the appropriate adjustments in expenses like daily coffee drinks, eating out, or monthly subscriptions you forgot you ever had.
5. Create a Savings Account for Deposits
Having an end goal for every dollar you save can be gratifying. And before you even buy a house in Queens, you’ll have to put down some money.
Be ready to withdraw a satisfying amount of money from a savings account dedicated to your plan of owning your dream home.
6. Talk to Lenders First
Before you spend time house hunting, make sure you’re pre-approved by a lender. With a lender in the waiting and a pre-approval letter in your hand, sellers will know you’re serious. And a possible sale is even more likely to come out of it.
7. How Much Can You Really Afford?
This is the most important question to ask yourself after you manage a budget. Consider three times your income as a starting point.
If you and your spouse or partner have a combined annual income of $100,000, your price range can be around $320,000.
And if you have further questions or concerns, it’s important to talk to a lender and begin a conversation about possible mortgages.
Buying your first home can be a daunting task, but using this guide can help you demystify the process. If you create a budget for buying a house, the odds will be in your favor.
With these tips and a deeper understanding of the current housing market, you’ll be ready to sit down and negotiate a deal that works for you and your family! Good luck.