Introduction
Remember when you first learning to ride a bike? You wobbled, you probably fell and swore never to get back on again. But you persisted, and here you are today, considering buying a home. Well, financial planning for a home is like learning to ride all over again – heebie-jeebies included. Whether you’re a 21-year-old with green wings or a veteran, I promise to make this guide a safe space for all.
Step 1: DIY Personal Financial Check-Up
Before you think real estate, you need to face the scary world of personal finance. But fear not! Just like cleaning up your messy room, you just need to know where to start. Begin by checking your credit score. When the numbers hover on the higher side, consider it as your permit to the ‘Potential Homebuyers’ club.
Step 2: Let’s Talk Money, Honey!
“Money talks, but all mine ever says is goodbye!” Sounds relatable? Welcome to budgeting 101 – the art of telling your money where to go, instead of wondering where it went. Establishing a budget should be your top priority. Begin by noting down your income sources, existing debts, monthly expenses and… (drumroll please)… your potential mortgage payments.
Step 3: Down Payment, The First Boss Battle
A down payment could make anyone consider a career in bank robbery. Well, it’s not that desperate! A down payment typically ranges from 3 – 20% of the home price. While it might be tempting to put down as little as possible, remember, the higher the down payment, the less you borrow, and the lesser you owe.
Step 4: Save for Unexpected Expenses
Unlike in Men in Black, you cannot just “zap” expenses you did not foresee. This is why setting aside funds for unexpected expenses is absolutely crucial. Be prepared for closing costs, moving expenses, repairs, and home maintenance. Remember, a homebuyer forearmed is a homebuyer fore-warned.
Conclusion
The journey to buying your first home can be as thrilling as a rollercoaster ride and can indeed give the same amount of butterflies in your stomach. But with a solid financial plan in place, it can be easier, funnier and less intimidating. So, my dear homebuyers, are you ready to ride?
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