The Importance of Budgeting BEFORE you buy a home
Jaime Osborn here. All the way from Memphs, TN. I am a real estate agent and Mortgage Loan originator for Weichert Realtors Benchmark and Benchmark Mortgage.
Stewart and I got together last week and decided to do some guest posts for each other. Since we are both professionals in our fields we thought it would be a great idea to share some of the knowledge we have in our fields with our individual readers. His post will be running at my website Blog For Buyers.com
Since I am in real estate and I originate mortgages, I decided to make my post about the importance of budgeting when purchasing your first home. You have NO IDEA how difficult it can be to truly enjoy yourself in your new home if you didn’t budget correctly and maybe got in over your head. Often time the term people use for this situation is “house poor.” “House Poor,” simply means that you have a nice home, but since you bought at the VERY tip top of what you could afford (or what you got pre-approved for regardless of whether you could afford it or not), you don’t have any extra funds to go out and enjoy yourself. Being “house poor” because of the lack of budgeting, means you are forced to stay in on Friday and Saturday nights, because all of your funds are being used to pay your bills. Sometimes in the most drastic of cases people aren’t even able to adequately furnish their new home because they didn’t budget for new furniture. For those of you who have experienced this, I feel for you. I went through it as well, when I bought my first home!
Budgeting can save you from this terrible situation! But It is extremely important to make sure you sit down and set up a budget before you get started looking at homes. Doing so will allow you the luxury to know that you will be able to still enjoy life after you purchase your new home. Budgeting doesn’t have to be a long, drawn out, complex thing. It could simply mean figuring out what you bring home ($$$) adding up all of your bills and figuring out how much is left. If you have money that you are currently using for rent than compare that to what you would use to pay your mortgage with, if you don’t figure out what you can afford to spend on housing costs.
It is important to go over your current bills, BUT also keep in mind that other additional bills may, excuse me no, “will” come up after you move in that you never thought about. For instance, do you know if trash pick-up is included in your city taxes or will that be an expense that you have to pay for out of your pocket. What about your utility bills? If the house you are buying is larger than where you currently live, or maybe less insulated, or possibly even if it has less efficient appliances, than you can expect an increase in the utility bill. What about keeping a small little stash just in case your toilet has problems or you need a window fixed. In addition to these issues, there are lots of other unforeseen expenses that come with owning your first home, and the only way for you to find out what all of them are is to buy your first house, there isn’t any way for one person to be able to tell another what their expenses will be, all I can do is warn you that there will be many of them. From replacing broken bathrooms mirrors, to fixing leaky faucets, to replacing warn out carpets, there will definitely be lots of them.
So once again, it is very important to sit down and formally write out a budget for yourself before you start looking at homes. Most lenders will honestly let you borrow more than you should, and this one fact can make you house poor IF you haven’t taken the time to think your budget out and decide how much you plan on spending for your housing costs. So remember a simple budgeting exercise before you start looking could mean the difference between being “house poor” and enjoying life to the fullest in your new home!
If you have specific questions about the home buying process, or would like to to be referred to an agent in your area that understands and can educate you along the way, feel free to get in touch with me on, Facebook, Twitter, or You Tube.