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Long Before You Buy a Home

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By : Jason Deines    99 or more times read
There are many things to consider before buying your first home. The most important is; how are you going to pay for it? Remember that every dime you borrow from a lender you will have to pay back with interest. The wisest thing to do is to plan ahead, way ahead, and start budgeting for your new home purchase so you can borrow less and potentially save thousands of dollars.

How to Prepare a Budget

Preparing a budget doesnít take long at all, in fact many people donít think that following the steps to prepare a budget are worth the time but they are. Keeping track of what you spend in your head just doesnít work because so many of us spend little bits of money here and there without remembering we did it. Take the time to find out where your money is going each and every day.

Where is the Money Going?

For starters you need to be able to track your daily spending. You will want to do this for a full month to get a good picture of your spending habits. It is surprising how a dollar here and there add up over a short period of time. One of the best ways to track your daily spending is to save receipts for everything you buy, whether it be with cash, credit card, debit card, etc. Ė save the receipts. Keep a daily spending diary where you can record each transaction. This will give you a good picture of your daily spending habits and where your money is going.

Next, determine what your expenses and income are. When determining your expenses look at the fixed expenses such as; car payment, insurance, rent, etc. Where you will have more control of reducing expenses is going to be with the flexible expenses. Basically, the flexible expenses is everything from your morning coffee to the utility bills. Tally these up for the month to see what they total all together.

Compare your expenses with your monthly income from your job, child support, and any other reliable financial assistance. Before you can even start saving for a home you need to determine how much income you have left after paying all the expenses.

The whole point about determining your income expense report is to see where your money is going and how much you have at the end of each month to put in a savings account toward a down payment for your new home purchase. To speed up saving you need to do one of two things, either increase your income or decrease your spending.

Tips on Saving Money

  • The less money you have in your pocket the less you will spend.

  • Control your credit card spending.

  • Pay bills on time and avoid paying any late fees or penalties.

  • Cut back on spending on items that you donít need but donít deprive yourself altogether.

  • Remember what you are saving for, it will be worth it.

  • Shop for the best deals and use coupons where it makes sense for you.

Buying a home is a huge financial decision and there are a lot of costs with homeownership. Understand where your money is going, set financial goals, and learn how to control your spending early in life and you will be on your way to a rich and prosperous future.

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