What we mean when we say ‘budget for the home you will own’
Budgeting for the purchase of a home is not just about saving enough for your down payment and closing costs, it means creating a financial plan for life while you are living in the home as well. It’s just as much future budget as it is the current budget.
Making the transition from renter to homeowner is a big decision, and while it can sometimes be a little stressful, but by planning ahead you can make it an easier (and stress-free) process. Budgeting is important to alleviate the stress associated with money issues that can sometimes arise if you purchase a home without knowing all of the associated costs – including down payment, closing expenses, ongoing maintenance, taxes and utilities.
Many first-time homeowners fail to really take into consideration their finances, plan a budget or set savings aside. The key is to create a realistic budget based on your goals. Track your spending and make your dollars go further by sticking to your budget once it’s in place. Budgeting offers a step-by-step formula for figuring out how to best save your hard-earned money to invest in homeownership.
- Start by listing your household income, then your household expenses, and review your spending habits.
- Keeping receipts for everything that you purchase will enable you to accurately keep track of where your money is going each month so that you can review and make necessary changes to your plan on an ongoing basis.
- Examine all areas of your life from entertainment to the type of food you buy, where you buy your food and clothes, and how and where you travel. Also look at your spending personality and make necessary adjustments.
- Set up a savings account. You can deposit a predetermined amount into this account each pay period that you will not touch unless it’s absolutely necessary. This will enable you to put money aside for a down payment and cover closing costs, as well as address ongoing homeownership expenses such as maintenance, taxes and utilities.
- Save up for big-ticket items. As you accumulate money in your savings account, you will be able to also save for specific purchases to help furnish your home – avoiding the buy now, pay later mentality, which can have a negative impact on your credit when you’re seeking mortgage financing.
- Surround yourself with a team of professionals. When you’re getting ready to make your first home purchase, enlist the services of a licensed mortgage professional and a real estate agent in Calgary. These experts are invaluable to you as you set out on the road to homeownership because they help first-time buyers through the home purchase and financing processes every day. They will also be able to answer any questions you have during the process.
If you are looking for guidance or clarity on homebuying or budgeting for homeownership, please feel free to reach out.