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Budgeting For Your New Home

Buying a new home is exciting. Your family is growing, your life is changing, and you’re making a valuable investment that will pay back for years to come. However, it’s also a significant purchase, which means you should have a budget written out before you start looking. Be sure that it’s flexible and able to modify based on what you find in your home search.

3 Ways to Find Your Dream Home
3 Ways to Find Your Dream Home

Down Payment

Banks want you to make a down payment. If you make a down payment you have equity in the home which gives you some ownership, regardless of your mortgage. And, in the case that housing market crashes, you are likely going to owe less than the worth of the home. To start saving for your down payment you’ll need to do a quick calculation.

  • First decide how much you can pay for a home – what is your max price?
  • Take 20% of that and put it away. A down payment is usually 20% of the total price.

Home Buying Professionals

Especially if you’re thinking of purchasing a home without a realtor, it’s important to factor in the costs of the other real estate professionals you’ll be using. From finances to budget negotiations, you’ll need professionals by your side to guide you throughout the entire process.

However, it’s always recommended to utilize the help of an agent. Nolo.com suggests, “For the most part, a real estate agent’s help is not legally required, though agents can help you with tasks that border on legal ones, such as preparing a home purchase contract.”  Consider the real estate professionals that you should budget for.

  • Real estate agent: Real estate agents in London will be beneficial with a number of tasks, from contractual writing to negotiation.
  • Accountant: Because you’ll likely be moving around a significant amount of funds, you want an accountant who can guide you through the financial process.
  • Lawyer: With contracts and negotiations, you want to be sure you’re making the right choices for you and your budget. Your lawyer can oversee any negotiations, and legal issues.

Renovations

If you’re purchasing a home that has been deemed acceptable by your home inspector, you may think you’ll be able to walk right in and start living. However, according to SmartMoney.com, “A home inspector s job is to conduct a visual examination of the physical condition of the house and certain systems within it. The key word here is visual.” That means there could be any number of unforeseen problems, such as warping in the floor, water damage in the walls or roofing issues.

  • Inspect each room of the house yourself, and make a tally of what needs to be fixed.
  • It is recommended to budget for the damages and then multiply that number by a factor of 1.5, according to Trusty Guides, to cover contingencies.

Buying a home is more expensive than just that. When preparing your budget, it’s important that you include a variety of factors to be sure you’re covering all your bases.

Photo credit: TheHappyHomeOwner.net

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