Budgeting Before Buying

With interest rates being at an all-time low, I can understand the urgency for people wanting to purchase a home. But I admonish the first-time home buyer to learn how to budget their money before purchasing a new home.

I go on to dwell in a state with one of the highest foreclosure rates in the country. I was so daze to learn that many people loose their homes within the first couple of years. I wondered why so soon. Sure the economic system is not the best and people are getting laid-off and having hardships, but some people are simply not prepared for the unanticipated problems and disbursals that come ups with owning their first home.

When I received a phone call from a friend telling me about a property less than a mile from my home that was in the procedure of being foreclosed on, I quickly made arrangements with their agent to see the property. It was a nice single household abode with some minor wear and tear. The household that was loosing the home was a basic middle-class family. I had less than three hebdomads to fold the deal since the home was to be sold on the courthouse stairway the following month.

Needless to state I bought the home and had instant equity in the property. Before the closing, I sat down with the former proprietors and asked why they were loosing their home. The married woman said to me in a matter of fact way, “Well we started falling behind on some bills, and soon things got out of control.” Iodine wanted to inquire her if she had a budget, did they maintain path of their monthly disbursal but I didn’t desire to enforce on their privacy. However, I explained to her that I was a Financial Coach and worked specifically with people to assist them customize a budget. She promised to get in touching with me after the transaction but I never heard from her again. I often inquire if things would’ve worked out differently seeing as if they had utilized a budget before and after purchasing their home.

I share with my clients some advice I heard from one of my financial mentors. Before purchasing a home, set aside the difference of your rent from what will be your mortgage payment, taxes, and insurance for six months. If you can manage without going into the money or determination it to be a hardship on your lifestyle then my advice is too update your budget with the class “repairs”. Take 1% of your purchase price, watershed that by 12. If you can budget this monthly cost into a separate nest egg account you are ready to go a first-time homeowner.