Budgeting will be one of your biggest hurdles when going from renter to homeowner.
You’ll need to understand how much money it costs to own a home and pay mortgage bills each month.
While renting may seem easier because you don’t have these costs, your monthly payments will most likely be more expensive than they would be if you owned your own home. The good news is that as long as you plan well and budget accordingly, there are ways to make buying a house affordable for your lifestyle.
Figure out what you can realistically afford by comparing mortgages available in your area with rent on comparable homes.
Next, look at what sort of amenities come with those mortgages—you may find that some features cost extra while others come included in certain loans.
Start squirreling away cash!
Set up an automatic transfer into a savings account so that once your down payment hits its goal (usually 10%–20%), you can move forward with paperwork and get closer to making an offer on a new place to call home.
If you save 10% of your pay check, it’s pretty easy to grow your savings over time. That includes increasing the amount each year by 1%.
If that seems difficult, remember that inflation means that prices go up about 3% every year (on average). So if you increase your monthly contributions by only 1%, you’ll still be ahead in terms of buying power next year.
Pay off debts as quickly as possible.
Save up 20% as a down payment to reduce your mortgage rate – but don’t let that prevent you from buying a home if it means giving up on other important goals (ie: travel or retirement). Remember that bigger houses often mean higher property taxes and utilities too.