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Tips for Budgeting While Buying Your First Home

Buying your first home is an exciting process because you get to envision your future and how you want the home to look. Also, let’s face it, house hunting is fun to see all the different styles, decorating, and dream of how you will personalize the space. However, if you want this future to become a reality, you must have strong budgeting skills. Here are some excellent tips to help you plan and budget before finding your first home. 

Avoid Large Purchases

“Avoiding large purchases might sound crystal clear, but let’s dive deep into why this is important. When you are buying your first home, you will need to look into home loans, mortgages, etc., in order to receive good coverage for you. For example, buying a car or starting a new line of credit might put a damper on your credit score. Even though these purchases can help your credit further down the road, it is best to do these after settling into your new home. In the end, if you want eligibility when finding a home loan, you should consider avoiding any purchases that could ruin that chance. “

Motto Mortgage

Avoid Unnecessary Spending

“If you’re planning on buying a home in the near future I recommend starting to budget as soon as possible. A great place to start is by stopping unnecessary purchases. Overspending isn’t always the fault of one big purchase, and this can also be done by making small unnecessary purchases throughout the month. Maybe skip Starbucks and opt for at-home coffee instead, or start taking lunch to work. All the little things end up costing thousands of dollars by the end of the year, so take a look at how many times you eat out or buy something in the spur of the moment and come up with a plan to avoid spending as much.”

-Rich Rudzinski, Founder and Technical Strategist for Oversight.co, Tragic Media, and Drivey.com

Rent Out Spare Rooms

“Building up the budget to buy one’s first house can be difficult, but the answer may already be closer to home than you’d expect. The rise of sites such as Airbnb gives you the opportunity to rent out any spare rooms your apartment might have, which can quickly become a source of extra cash to go towards your house fund. These websites allow you to approve guests and dates ahead of time, meaning that you only have to rent out your room when it’s most convenient for you. As long as you have the spare space available and the ability to maintain without much fuss, renting out your room can be a lifesaver for your first house budget.”

-Kate Lipman, Sales & Marketing Consultant for embrace Scar Therapy

Try Local Vacations For a Bit

Buying your first home is an adrenaline rush, and probably a moment you will cherish forever. But, there are some things you have to alter in your lifestyle if you want to afford a house. Besides cutting back on your outings, coffee, or restaurant foods, you may want to try cutting back on any vacations. 

Now, you don’t have to cut out vacations and self-care time altogether, but maybe try doing something local instead of going out of state or the country. Sometimes, the best way to relax is to get a hotel or Airbnb close by and get a massage or see a chiropractor to loosen up your body. Some even consider a vacation as binge-watching movies or shows uninterrupted. No matter what you prefer, you will save more money for your first house if you choose to do a local vacation or weekend getaway. 

Angie Snow, Director of Customer & Product Training at ServiceTitan

Check Your Credit Before Shopping

“A common problem when shopping for a home is getting rejected for a mortgage or paying way more than you expected, both because of a low credit score. Thus, it’s important to check your credit score beforehand and make sure there isn’t anything on there that could be a red flag to a lender. If there are issues with your credit score that need to be fixed, take the time to work on improving it so you avoid any surprises. This also means you should stop new credit activity until after you close, as you don’t want any credit drops right before you try to get approved for a mortgage.”

-Joe Spector, Founder, and CEO of Dutch

Get Pre-Approved

“Before you start shopping around for a home and find one you want to buy, make sure you can get pre-approved by a lender. Receiving pre-approval shows real estate agents that a lender has already looked at your financial background and determined how much you can afford on a home. By getting pre-approved for a home, you will be able to shop around for homes that are within your budget and have more bargaining power when you shop around. With this, you can avoid surprises when you actually choose a home such as a low credit score or a low debt-to-income ratio.”

-Jacob Dayan, CEO of Community Tax

Make Your Must-Have List

“Before you start shopping, decide what you absolutely need in a home. Consider the different types of homes and decide if there’s one thing you absolutely must-have. Then think about other things you need your next home to have. Maybe you need an extra bedroom for a baby on the way or a home office if you work from home. Having a concrete list upfront will help you avoid falling in love with houses that don’t check all your boxes. Once you’ve made your must-have list, you can put together a nice-to-have list. These are all the features that would be great to have in a home but aren’t necessary.” 

-Daniel Kane, Founder at Ridge 

Reduce Moving Expenses

“Moving is one of the biggest expenses you’ll face after purchasing your first home. Although it can be a bit pricy, there are ways to make sure your move is as seamless and cost-effective as possible so your home-ownership budget isn’t ruined. Be sure you pack as much of your belongings as possible, that way you aren’t billed for the time it would take the movers to do the packing and they can complete the move faster – because everything is in containers. Also, carefully calculate how many movers you need. It may seem cheaper to get a smaller crew, but remember, you are billed hourly, so a smaller crew can end up being more expensive.”  

-Kevin Mako, Founder of Makodesign + Invent

Invest Your Savings

“If you’re getting ready to buy your first home and have a savings account, it may be good to take that money and find a good place to invest it. Oftentimes, we have money sitting in our savings accounts and eventually use that money on things our savings accounts weren’t intended to fund. Finding a good investment opportunity can help us avoid backtracking on our savings efforts and, eventually, allow the money to multiply itself. Conduct some thorough research and find an investment that gives you a return on your investment in a reasonable time frame – based on when you’re making the purchase.”

-William Armitage, Co-founder of BestOdds

Consider a Real Estate Agent

“Many people buying their first home look at real estate agents as costly and out of their budget, but what they don’t realize is that having a real estate agent can end up saving you tons of time and money by doing tactics most people buying their first home aren’t good at. For starters, they’re great at negotiating. This can be from buildings, closing agents to even talking down a seller thousands of dollars on a price. Real estate agents also know the market by evaluating local sales and trend data- A pricey house you’re looking at can have comparable houses on the same block for much cheaper rates. Most importantly, real estate agents can keep track of everything for you making sure you’re aware of all of the added costs of buying a house, such as repairs, potential bids, etc. Real estate agents are on your side and work with your best interests and budget in mind to meet your personal and financial needs.”

-Jason Brandt, Customer Success Director at Podopolo

Don’t Get Stuck In a Bidding War

“While it’s easy to get your heart set on the perfect house, it’s also easy to get caught up in a bidding war, which can end up costing you more than you expected. When you make an offer on a home, set a limit for how much more you’re willing to pay if the seller counters your bid, and make sure you’re not going to go above that set amount. This happens frequently, so it’s important not to get too attached to a home and be able to walk away with your budget in mind. Everyone has their dream home, but the budget you created is essential for maintaining the house you choose. Never get too emotionally attached to a home because once your imagination of living in the home takes over, you’ll start making excuses on why it’s a good idea to keep bidding higher prices.”

Megan Jones, Community Outreach Manager at NutraSweet Natural

Always Think Ahead With Any Expenses

“An important budgeting tip when buying your first home is ALWAYS to think ahead and consider how much you will be chipping away at your mortgage over time and other possible expenses. Though it’s not one of the exact things to budget for after buying a home, being aware of how much equity you’re building up in the home over time may influence your future housing decisions and expenses. Even thinking ahead for smaller expenses, such as food, cleaning supplies, etc., you can never go wrong with plotting out different scenarios where you think you will need to put some money aside for or save up.”

 -James Burati, SVP of Sales and Marketing at 1-800-Pack-Rat

Learn To Live On Your Budget First

“Homeownership is difficult, stressful, and intimidating. Taking the necessary steps before purchasing your first home can help alleviate a lot of stress. Take some time to imagine yourself as a homeowner and build a realistic budget around that imaginative scenario. Train yourself to live off of the budget you created; therefore, once you become a homeowner, you will already be saving the money you want. Some things you can do is maybe use the heater or AC less, be sure to turn off lights, use less water, etc. Those things will help you save money with everyday utilities. Then you can also imagine what your property taxes and homeowner insurance will be like and start putting money into a savings account for those purposes. Once you get into this routine of budgeting your money as a homeowner would, you will feel much more comfortable by the time you become a homeowner. It is very stressful, purchasing a home, therefore doing what you can to make the process less stressful is a good thing for your mind.”

-Himanshu Agarwal, SVP of Solutions at WorkBoard

Decide Which Season You Want to Buy-In

Buying your first home is a gratifying experience. However, it is not always an easy process. When it comes to getting your first home, you have to overcome many obstacles or things to sign up for, but in the end, it’ll all be worth it. When picking your first home, you may want to consider the season you’d be moving in. 

Depending on your location, if you get to experience it every season, it may be cheaper to buy during the winter months. This may seem confusing, but let’s think about it. After summer ends and we enter the fall season shortly after comes winter and a multitude of holidays, so many people believe that nobody wants to move during the holiday season and would rather wait until the holidays pass. Therefore, the winter months are preferred to find houses for a lower price and a faster move-in date. 

– Adrian Pereira, Co-Founder at Eco Pea Co.

Ask Family and Friends for Help

Buying a home is an exciting experience for most, but it can lead to stress for others. This stress is mainly because most first-time homebuyers need to furnish their apartments entirely or use it as an opportunity to start fresh with everything. While it may be nice to buy a new couch rather than using the one from college or your last place, not everything needs to be new. It’s best to ask friends and family for help. In fact, most of them are more than willing to give you any extra appliances, furnishing, clothing, or miscellaneous items. 

Also, it never hurts to ask your friends and family for advice on home buying and the entire process. They might even refer you to a real estate agent or open your eyes to a location you haven’t even thought about. Not to mention, they have been through this process before so they will be the best support system for you. 

-Adrien Dissous, Global SVP of Marketing at Babo Botanicals

Don’t Forget About Supplementary Expenses

“Do not make the common mistake that many first-time homebuyers fall for, forgetting about hidden costs.  When budgeting for your first home, it is important to remember that the down payment and monthly mortgage payments are not the only fees you will be responsible for.  Make sure to save up for other expenses such as maintenance costs, homeowners insurance, and property taxes.  A good idea is to make a list of all the expenses of buying a home and also owning a home.  Then, make sure you can afford these additional costs before pulling the trigger on your new house.”

– David Ring, Senior Marketing Manager at MCT Trading

Inspect the Home for any Future Problems

“When buying your first home, it would be good to get a professional opinion on any potential problems the new home might pose. Inspecting any past damages that the house has endured is important because it may very well still have the same problems. Water damage, for example, is something that can be easily hidden or overlooked externally but may still be an issue. Another example is the potential damage a neighboring tree’s invasive roots could have if they grow far enough under the house. Being aware of any small issues that the house may have could save you from repeat damages and expenses in the future.”

– Gregg Dean, CEO and Co-Founder of Layla Sleep

Always Think Ahead With Any Expenses

“An important budgeting tip when buying your first home is ALWAYS to think ahead and consider how much you will be chipping away at your mortgage over time and other possible expenses. Though it’s not one of the exact things to budget for after buying a home, being aware of how much equity you’re building up in the home over time may influence your future housing decisions and expenses. Even thinking ahead for smaller expenses, such as food, cleaning supplies, etc., you can never go wrong with plotting out different scenarios where you think you will need to put some money aside for or save up.”

 -James Burati, SVP of Sales and Marketing at 1-800-Pack-Rat

Get Everything in Writing

“There are many aspects in play when buying a home, so to make everything go smoothly for you and your family, get important information in writing. Make agreements with the seller on your contingencies, like if you find down the line your mortgage does not go through or there are issues found within the house during the inspection. If the house you are purchasing is a new build, you should also get in writing every detail of the house you are purchasing so that there are no surprises when it is finished. This will likely be one of the biggest investments you will ever make, so maintain some peace of mind going forward by documenting every aspect.”

-Brandon Brown, CEO of GRIN    

Search for Used Furniture 

“Platforms such as Facebook Marketplace, Offer Up, Craigslist all have great options for discounted furniture. Typically, people will be offering pieces for a very reasonable price, even for free if you pick them up. These various websites/applications allow for users to search within their area or even nationwide, assuming the item can be shipped. You might not be inclined to furnish your entire home this way, but it’s definitely worth occasionally checking to see if anything matches your style. Be sure to use these platforms safely by not giving out your phone number and communicating through the suggested instant messaging or email options.”

-Sam Rogers, Outreach Manager at Ziebart

Now, we hope you feel confident and ready to take on your first home. With the advice and help of these tips above, you will find a budgeting routine that works for you. After implementing one or more of these tips for budgeting while buying your first home, you will be able to save and move into your new home in no time.

Guest article was written by Matt Casadona.

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