Buying your first home will likely be one of the biggest if not the biggest purchase you ever make. Houses tend to cost a pretty penny and there’s even more money that goes into them beyond the price of the house itself! If you’re planning on buying your first home, you’ll probably want to think about making sure you have all of the money you’ll need from the purchase itself to the fees you’ll be paying and everything that comes after. Here are a few tips to help you budget for your first home.
Make Sure You Have A High Credit Score
You’re likely going to have to take out a mortgage on your home so having a high credit score is imperative. In order to get a good loan rate, be sure your credit score is at least a 740 if not higher. If your credit score isn’t high, take the time to improve it a bit before you start home shopping. Make sure you’re not in loads of debt and that any debt you do have, you pay your bills on time. In the end, it might mean having to wait a bit for your dream home, but at least it will help you actually afford your dream home.
Put Aside Money For After Purchase Maintenance
While it’s great if you manage to purchase the house you want, it’s essential that you make sure you have a budget put aside to go towards any maintenance that might need doing after you move in. If you move in over the summer only to get to the winter and find out there’s something wrong with your heat, you’ll want to have the money put aside for that. A lot of the maintenance that may need to be done can be expensive and having a surprise expense is no fun at all.
One of the most common things first-time homebuyers fail to realize is that aside from the down payment, there are usually closing costs associated with the purchase of your home. The closing costs tend to cost around 2% to 3.% of the overall cost of your new home, so be sure to have at least that much saved up. This means if your house cost $150,000, you probably want to have at least $5,000 saved up to cover the closing costs.