4 Budgeting Tips for You When Buying a Home
Many think homeownership costs will get in the way of living the type of life they are accustomed to, whether that includes dining out at new restaurants, shopping or traveling around the world. Buying a new home doesn't mean you will have to give up all you have gotten used to. The key to home ownership means sticking to a budget, knowing what you can afford and managing extra costs wisely. If this is something you really want with a little bit of patience and budgeting your dream can become a reality. Here are 4 tips that will make your dream become a reality:
1. Practice a home ownership budget first
Before buying, encourage your clients to estimate any new costs. If they expect their total budget to increase as owners, they can try setting that money aside into a savings account to help paint a realistic picture of what it will be like to live with a little less discretionary income—can they still maintain what they’re used to, or will they need to find places to trim from their everyday spending?
2. Manage credit & keep on top of debt payments
Typically, the better credit score a client has, the better the likelihood of a more favorable interest rate, which means lower monthly payments.
3. Don’t spend the entire preapproval amount
Getting preapproved is a key step in the home buying process. But people are often preapproved for a higher amount than they’ve budgeted for. Advise clients that they don’t need to spend their entire preapproval amount. Staying under the approved limit means they’ll have more money on hand after purchasing to still live comfortably.
4. Understand the importance of insurance
Most lenders will require buyers to purchase homeowners insurance. While shopping around for a good deal or saving money by bundling policies can keep homeownership costs down, it’s important for clients to consider the quality of the coverage. In case something does go wrong, the insurance could cover major costs instead of sinking your client’s budget or depleting emergency savings.
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