The thought of owning your own home can be exciting, but it's important for you to take the time to plan out your purchase before making the big commitment. The substantial cost of real estate can mean you'll make monthly mortgage payments for decades. And, the responsibility of owning a home doesn't end there. Maintenance, taxes and utilities all add to the cost of home ownership. Use these tips to make sure you're financially prepared before you start shopping around for your dream home.
Start with a budget
This step is the most basic part of saving to buy a home, but many people ignore this essential planning technique. Budgeting lets you determine how you can make financial sacrifices in favour of saving. Further, creating a budget allows you to accurately control your financial status and can help you to determine exactly how much you can afford in terms of monthly mortgage repayments. People who fail to budget often find themselves struggling with mortgage payments down the line because of a lack of proper planning.
Find hidden sources of income
Are you living with furniture or other physical clutter that you just don't use? It's easy to get rid of anything you don't need by selling it online. There are several different websites from which to choose when you want to sell online, and you always have the option of holding a traditional garage sale to get rid of small items that aren't worth the cost of postage.
Take advantage of assistance programs
While eligibility criteria and the amount of available financial assistance varies from state to state, every state offers assistance programs for people who are buying their first home. You may be eligible for a grant of up to $7,000, and this money can be used to pad any savings you have accumulated on your own.
First home buyer savings accounts are also valuable when you're getting the money together for a deposit. While you will need to have the account open for at least four years, the government will match up to 17 percent of the money that you deposit into such an account.
Get your debt under control
Handling multiple debts at one time can become overwhelming. Pay down your debts while you're saving for a deposit in a bid to eliminate as many debts as possible before you take on a mortgage. That way you'll only have to worry about one payment each month, rather than a mortgage payment, credit card bills, personal loans and car finance.
Buying your own home is a serious decision that requires careful financial planning. As such, it is important to consult a mortgage broker to ensure that you don't take on more than you can handle when you apply for a home loan.
Recently asked questions
|How much deposit do I need for a home loan?|
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|How do I know if I'm eligible for the First Home Owner Grant?|
|What does a mortgage broker do?|