This post was last updated on October 17th, 2022 at 10:28 am
Buying a home for our family is an American dream for most of us, but it is a bitter fact that home buying is an expensive process. The brighter side to it is that you can save money when buying your home with the help of various tools available.
If you wish to save a large amount of money later in your home buying process, you need to do your homework efficiently, be sincere in your efforts and take responsibility. Not all of us have the financial capability to pay the full amount to buy a home with our savings.
Due to that, you will actually be paying much more in the long term as a result of monthly mortgage payments, insurance and tax charges, etc. which add up and result in a very hefty amount.
In order to derive maximum savings out of your home buying process, it is vital to do essential homework just as you need to do your homework in school to obtain good grades. The following steps suggested by SPV Mortgages can help to save money when buying your first home.
How Much Money Should I Save Before Buying A House
As a first step, sit down and create a budget. Calculate the number of earnings brought home per month, and list down the payments you need to make each month such as the bills, etc.
Estimate all of your expenses and subtract them from your income. In this manner, you will be able to determine the amount of money left per month. From here, you can decide on what amount you are willing to allocate each month toward your home payments.
Cut Back Your Spending
To cut down on expenses, it is required to cut back on spending. Before purchasing any item, question yourself as to whether it is really essential to buy that particular item. Understand the difference between needs and wants, and ensure that proper handling of needs vs. wants is adhered to.
The money saved can be contributed toward your savings, and very soon you will find that the smaller amounts result in larger savings.
Cost cutting does not necessarily mean that you have to act stingy and punish yourself by refraining from all the pleasures of this world. Instead of purchasing expensive coffee on the way to work every day, make your own coffee at home and take it with you.
Take your lunch from home to work as an alternative to dining out during lunch. Do comparison shopping at your local stores and do grocery shopping with savings, or use coupons whenever possible.
If you love to watch movies, instead of going to theaters, rent movies and watch them at home. These are just a few ways to cut down unnecessary costs.
Have Reminders to Achieve Your Goals
You know that you will not be able to achieve your goal of home buying in a day. During the process, you will have to make a few sacrifices by not buying any of those items that are other than necessities.
Whenever you feel the temptation to make spending on anything which is not a necessity, have reminders set up in any form to alert you that your goal of being a first-time home buyer is delayed due to your spending.
Do Your Math
If you are serious about saving money to buy a home, then do your math with sincerity. Do not blindly hold fast to whatever is suggested by your bank. While the banks are more considerate towards attaining profits for themselves, you should be attempting to derive maximum savings out of your money in order to buy a home.
Banks may push you toward an amount that you can pay at your maximum financial ability, but it need not be the right amount that you should be paying, and banks will not let you know this amount.
There can be a vast difference between these two amounts, and as a result, if you do not do proper math, you might end up paying the maximum amount instead of the actual amount.
Therefore, sit down and calculate your mortgage as a part of your homework. Take into consideration the length of the term of your mortgage you wish to stick to, and based on that, make up your mind on the amount you are prepared to spend each month toward payment.
No matter even if you qualify higher than your determined amount, once you have determined the amount you want to pay, be careful not to spend any more than that specific amount.
Do not overspend and control your feelings by being prepared beforehand on how much you will pay for your home. You can do your math using any of the mortgage calculators that can be found on the web.
Pick the Right Home
It goes beyond saying that it is important to pick the right home, in addition to finding a home that fits in your price range. Do not fall in love with any home without performing enough research on it.
It can be overwhelming to decide on a particular home out of the numerous homes available for sale at a time. Examine all the essential factors and costs involved in home buying, and do not merely look at the sales price of the home alone.
The other costs such as insurance, taxes, homeowner association fees, water charges, heating and cooling costs, etc. can make a substantial difference to monthly payments. During your analysis, include all these factors into consideration.
Arrange for Professional Inspection
After you purchase your home, you do not want to be alarmed by the maintenance costs due to the problems with the home. Unlike a rental home, once you own a home, it is your responsibility to fix any issues and make payments.
To avoid unexpected maintenance costs, get your home inspected thoroughly by a professional inspector before you finally purchase the home. These inspectors are trained to identify issues with the home that may otherwise go unnoticed. Of course, you will have to pay a few hundred dollars for the inspection, but that amount will save you from huge spending to fix issues in future unexpected problems.
After the inspection, if you are comfortable with the known issues with the home, you can talk to the seller to get them fixed before you own the home.