Owning a home is one of the biggest milestones in adulthood that many people hope to achieve, but it can be difficult if you don’t have the right financial support to afford the downpayment. Therefore having the right budget plan in place can help you reach your homeownership in a reasonable amount of time. A better downpayment will mean lower monthly payments toward your mortgage and allow you more flexibility with housing prices when you search for your home. First time home buyers in Roseville should aim for a comprehensive budgeting process for a more successful home purchase.
How Much is Required to Buy a Home?
Although many people begin saving for their homes early on, most don’t know exactly how much will be required to buy it. Downpayments aren’t constant across the board since they will vary depending on the purchase price but putting more down initially will save you plenty in the long run. Figuring out from the very start how much is required will give you a much better idea of what you can and can’t afford, especially given the lifestyle you want to lead.
The question is, how do you know how much to budget for your downpayment? A good rule of thumb is to save up to 20% of the purchasing price. For instance, if your dream home is worth $300,000, then you should have at least $60,000 tucked away for the initial payment.
Don’t Forget Other Costs
While the down payment is no doubt one of the most important costs that come with purchasing a new home, it’s crucial to take into account other fees as well, such as mortgage costs, escrow and title fees, and home inspection fees. Allot two to three percent of your purchase price to these fees. If you are not able to save it yourself there are several other options to consider. 1) You can request the seller to help pay for them when you make your initial offer for their home (the seller has to agree); 2) At times, if the interest rates are right, you can take a higher interest rate and get a credit from the bank to cover some or all of them (Roseville mortgage broker can help you with this); or 3) You can accept a gift from a relative to help cover some or all of them.
Planning Your Budget for Your Home Purchase
Settling on a budget first requires you to decide on the purchase cost you’ll aim for and the amount you want to save. After that, you must decide when you want to purchase your home so that you can set a target amount to save up per month to reach your goal. Once you’ve figured out this amount, you can begin finding ways to achieve it.
Outlining Your Final Monthly Budget
The amount you need to save per month should be factored into your monthly income and expenses. When calculating your income per month, make sure to consider the net amount, meaning the income you make after you’ve deducted the non-negotiables; such as household expenses, retirement pay, insurance, and bills. Saving more money to reach your purchase goal may be challenging, but it’s not impossible.
On the other hand, expenses can be treated as an opportunity because you have more control over them. Cutting out extras like your daily coffee and eating lunch out will save you plenty in the long run and can add to your goals of saving up for your home. Even your fixed expenses like rent or loans (car, personal, or student) can have a workaround. For instance, you could choose to rent out a cheaper apartment or sell your car for a cheaper option with a lower monthly payment.
Lastly, consider making adjustments to your home purchase goals. Explore different options for home loans in Roseville and be a little bit more flexible with your decisions so that you can achieve your dream home sooner rather than later!
Buying a Home in Roseville with Steelman Mortgages
Knowing where to start with budgeting for your home’s down payment can be confusing. Yet, taking it to step by step and remembering to account for all income and expenses is one way to ensure that you plan your finances accordingly to reach this ultimate goal. With the help of the right mortgage company in Roseville, you can achieve your dream home in no time.
Here at Steelman Mortgages, you’ll find one of the best mortgage lenders in Roseville, CA. We provide a simple and enjoyable process to provide answers to all your mortgage questions. To apply for a fast and easy mortgage, contact us today at (916) 847-7263!
