For most people, the largest and most important investment they will ever make is their home. This is their shelter, a tax benefit, and, once the mortgage is paid down, a source of wealth that can be tapped into during retirement.
For first-time home buyers, it is important to get the money side of things straight before diving into homeownership. While buying from a quality home seller like Bright Homes is beneficial, getting a person’s finances straight is also important. Keep reading for tips on how to plan the financial side of things for a new home purchase.
Build an Emergency Reserve
Before looking at homes for sale at https://www.bright-homes.com/, it is a good idea to build an emergency fund that will cover between three and six months of a person’s living expenses. It is necessary to build a cash reserve that will cover non-discretionary expenses, including insurance, utilities, clothing, and food. This way, if a person’s income takes a sudden hit or if a large home repair is needed, they will not be destitute or in other financial trouble.
Calculate the Total Housing Costs
Another step to take before looking into homes for sale at https://www.bright-homes.com/contact/ is to figure out a person’s housing debt ratio. This is used to determine how much of a home a person can realistically afford. According to experts, the total costs should not be over 28% of a person’s gross annual income.
For example, if someone makes $75K per year, the housing costs do not need to exceed $1,750 per month. It is important to make sure that all related costs are figured into the equation, which includes the mortgage payment, taxes, homeowner’s insurance, and any associated fees that may be required.
Consider On-Going Maintenance Costs
It is estimated that homeowners spend, on average, about one percent of the value of their home on maintenance costs each year. This means if someone buys a $175K home, they should plan for maintenance costs of about $1,750 each year.
Keep in mind that, just because this is the estimated cost of maintenance, it does not mean a homeowner will be spending it every year. Sometimes, more or less maintenance is needed, which means this is just an average—a figure to use for planning purposes. Other factors will impact maintenance costs, too, which include the home’s age, labor costs, material needs, and the geographical location of the home.
Plan for a 10% to 20% Down Payment
If someone is taking out a mortgage for $175K, they should have a down payment of between $17.5K or $35K. If the individual makes a down payment that is under 20%, they will likely have to purchase PMI (private mortgage insurance), which adds another expense to consider.
When it comes to buying a new home, many factors must be considered. Be sure to keep the information here in mind to plan properly and ensure that all related costs will be covered and that no surprises will occur.
Company Name: Bright Homes
Contact Person: Media Relations
Email: Send Email
Phone: (209) 526-8242
Address:1620 N CARPENTER ROAD, BLDG B
Country: United States