7 Helpful Tips for Creating a Budget When House Hunting

7 Helpful Tips for Creating a Budget When House Hunting

House hunting is an exciting time. Searching new neighborhoods, exploring new cities, and checking out all of the amenities that new communities have to offer is fun for just about anyone. However, along with looking for a new home comes the task of deciding just what you can afford. Here are 7 helpful tips for creating a budget when house hunting.

1. Factor in Closing Costs

Always make sure to budget for the costs you’ll incur at the closing table. These expenses typically include the inspection, the appraisal, and any other prorations that will appear on the settlement sheet. Closing costs are usually 3-6% of the purchase price, so plan accordingly.

2. Think About Home Maintenance Expenses

You’ll definitely be faced with home maintenance costs, so make sure they are in the budget! Things such as lawn maintenance, HOA fees, exterior and interior maintenance, and any repairs that need to be made should all be taken into consideration.

3. Ask About Taxes

Remember that there will be more to your monthly mortgage payment than just principal and interest. Taxes will play a major part in how much you can afford, so know the tax rate in the area you are looking in and factor it into your monthly budget.

4. Think About New and Ongoing Expenses

Owning a home is costly, but it can be manageable if you create a budget ahead of time. New and ongoing expenses will come up on a regular basis, so make sure you can anticipate how much money you will need. Think about the cost of moving – you’ll have to hire movers, so shop around for the best rates, especially if you are moving long distance. You may also have to purchase new furniture for the home, paint, replace lighting fixtures, purchase window treatments, and replace flooring.

5. Factor in Your Monthly Debts

Only a certain percentage of your monthly income should go toward your housing expenses. Make a list of all the costs you incur, such as car payments, food, clothing, credit card payments, and utilities. Also, keep in mind that you’ll have to have money for the occasional unexpected expense. Make sure that you are not stretched to the limit and that your monthly expenses easily fit into your overall budget.

6. Determine Your Down Payment

You’ll need to put a down payment on a new home, which can range from 3% to 20% of the purchase price. This depends on your credit history and the type of mortgage you choose, so plan ahead.

7. Track Your Spending

Purchasing a new home requires careful financial planning, so don’t spend haphazardly in the months beforehand. Know what you are spending at all times, and always stick to your budget so that you don’t get off track in the process. A real estate expert can help you along our home-buying journey and make it as enjoyable as possible.

The house hunting process is an exciting time, but it’s important to take time before you even begin looking at homes to create a budget and determine how much house you can afford.