Our Guest Author today: Anthony Baker
Owning the property of your dreams requires meticulous planning and discipline. It all comes down to how much you can afford to spend on this purchase. Therefore, you must take specific steps when creating a budget for your dream home. Here are some tips on planning and saving enough funds to make your dreams a reality.
Determine that magic number
The first step towards your dream home is determining how much money you have for this project. This number is essential as it will affect everything that happens later. Investing in homeownership is the most thoughtful thing anyone can do. Nevertheless, you mustn’t forget that you should be able to maintain this home of yours and still have other expenses that won’t go away.
Start with seeing how much cash you and your partner have and how much money you can loan from a bank. Today, people can go and get pre-approved for a mortgage. That means you go to the bank, and they evaluate your situation even though there is no actual property you are buying. The bank then tells you what the highest mortgage you could get is. That also shortens the later approval period when you find the dream home you want to buy. If you are not eligible for loans or prefer not to get involved with banks, you should see your options before looking for a house. Looking for homes without knowing how much you can spend on them is not a good idea. That way, you can fall in love with one you can’t afford, which will ruin everything that comes after.
|Getting pre-approved for a mortgage is one of the steps toward determining a budget for your dream home.|
Plan how to save for the down payment
Even if you are eligible for a loan, you’ll be obliged to make a down payment in cash. That is not necessarily a small amount – it can be up to 20% of the purchase price. Maybe selling something you own but don’t need as much as your home would be a good idea, but that may take time. When several people are interested in the same property, wasting time is not a good idea. That is one of the reasons why you should start saving for a down payment in advance.
Consider increasing your income
If you don’t like selling something you own to secure funds, you have two options. One is to reduce your expenses, which is not always possible, and may not be enough. Another option is to increase your income. You should try turning to online side hustles to realize your dream of becoming a homeowner. There are many ways to earn money online, and not all require learning new skills in advance. Also, changing your day job is sometimes the only option. But always bear in mind that people have to make choices and take some risks to achieve great results. Think about what you want and whether it is worth what you must do to get it.
For creating a budget for your dream house, analyze your current and future monthly expenses
Cutting your monthly expenses can be a way to get additional dollars you lack. You’ll manage that by analyzing all your costs. Put every dollar you spend on paper. Write down even those chocolate bars you eat in the morning or the massages you take occasionally. All matters! Then look at it all and see where you can make some cuts.
Consult the other members of your family
Even if you are the only one that supports the family, you should include others in every step of this project. They will be living there too, and they can make a valuable contribution in terms of ideas and income. Your partner may have been a stay-at-home parent who wishes to contribute financially. Your children should know if you will cut the expenses and understand why and how. A family should do everything together, especially when making big decisions. Never let that slip from your mind.
|You should include your family members in every big decision, including this one.|
The closing and relocation costs are there too
Don’t forget about the costs of closing the deal and of relocation. Closing costs are unavoidable, and the best thing you can do is research how much it will be. Another set of costs people tend to forget is the unavoidable relocation costs, but you can do something about their height. It may seem to you that your buddies can do that for you. But they are inexperienced with carrying stuff so they may break something. Also, it will take them longer, and you will need to provide food and drinks for them, as they will be working for free. Finally, unless some of them have a van or a truck, it will take more round trips, gas money, and more time. Looking at it that way, hiring pros can help you save money and move on a budget. Put some effort into doing the math and, again, consider your priorities to know how much your budget needs to be allocated.
|Make sure you don’t forget about the costs of relocation.|
Be realistic in your wishes
The final advice when developing a budget for your dream home is to be realistic. Do you need to buy a mansion that will have you turn your life upside down and work 15 hours a day only to afford it? Everyone should do all in their power to reach the goal of buying the property of their dreams, but not at some sky-high cost. Your wishes need to be per what you are capable of achieving. Your home should be your refuge and not your source of anxiety.
Creating a budget for your dream home requires thorough thinking and planning. The more detailed you are, the higher the chances of making the proper purchase that will provide a comfortable life for you. Remember, you are trying to make your life nicer and not more complicated and tense, so do your best, and it will pay off.
Anthony Baker is a financial consultant on the logistics team at zaptmovers.com. He also offers free valuable financial tips through his articles related to real estate purchases and other financial endeavors. Helping couples manage to buy their first property is a joy for him, which was one of the reasons why he started writing these blogs.