3 Tips For Purchasing A House Within Your Budget

Buying real estate is a major decision. There are too many people who overextend themselves when they try to buy a new home, and regret it later. Some of these people become "house poor," meaning all of their money goes into the house, while others miscalculate how much they really can afford and lose their home. You need to do everything you can to avoid this problem. Here are a couple things you can do to make sure that you are not over extending yourself when you purchase your home.

1. Don't Exceed 28% Of Your Income

When choosing a home, it is important that you choose a house that is in your budget. As a general rule you should not buy a house that will cost more that 28% of your income. This means you should calculate how much you make on a monthly basis. Multiply that number by .28. This is how much you have to spend on a monthly payment. Be aware that your payment will not only be your mortgage, but your insurance, taxes and HOA fees associated with the property. By not exceeding this amount, you will be sure that you are buying within your budget.

2. Have 3 Month's Worth Of Savings

Another important part of buying a home is to make sure that you have the proper savings. Many people think that they only need to save up for the down payment, but in reality they need a down payment and an emergency savings fund. In order to figure out how much you need in this account, calculate how much money you need to live on each month. This is not necessarily how much you make, but how much it will take to survive. Then multiply that number by 3. This is how much you should have in your savings account. Then if you fall on hard times, you have the money in the bank to make your mortgage payment and keep your family afloat.

 3. Upgrade Incrementally

When you get into the house, you may be tempted to start doing all your upgrades immediately. Even though you might want to landscape, buy new furniture, install a fence, or finish the basement, you should be careful about doing it all too quickly. Instead, wait until you can pay for everything with cash. Don't take out more loans to make these changes. That will only make it harder to make your mortgage payment each month.

By doing these simple things you can be sure that you can afford your home. For more tips and helpful information, contact a company like Realty Executives.