How to Budget for your Dream Home

As the year draws to an end, many of us are making plans and resolutions for the next year. For some, this will mean planning to purchase a new home. Since buying a home is the largest purchase most people will make in their lives, it goes without saying that preparation and research are key. By using these tips to fine-tune your finances, you can buy your new home with minimal concerns and a happy outlook for the future.

While you can technically have debt when you buy a home, it is much easier to not only be pre-approved but also make your future mortgage payments when you don't have to worry about paying off outstanding debt. Another perk is it will improve your credit score which is an important determining factor when purchasing a home.

If you are planning on buying a home, it’s safe to say that you know some budgeting basics. While it is easy to know how to budget for necessities like housing and groceries, where many people mismanage their budget is when it comes to incidentals like doctor and dentist visits, routine car inspections, and new clothing for themselves as well as the family. By setting a budget and then monitoring it monthly, you can see if your budget needs to be tweaked and where you may need to pull back financially. If you’re more of a techie, there is a plethora of budgeting software that can help you see exactly where your money is going.

Many lenders require a 10-20% deposit depending on your loan type. When you do the math, it may seem like a big chunk of change (it is) but keep in mind that buying a home is not just another purchase but an investment. After speaking with your lender and determining how much you’re pre-approved for, you can set a realistic goal to ascertain how much you should be saving monthly to achieve your ultimate goal, a new home.

-Written by our Building Coordinator, Suzanah Hajrula