How to Manage Funds When Buying a New Home

Written by  //  2018/05/15  //  Buying a Home  //  No comments

home funding

Buying a new home is a huge step whether you are a first-time homebuyer or a long-time homeowner. Because buying any type of home can be a huge drain on your finances, you will want to be sure that you build a solid financial foundation before undertaking this commitment and that you are prepared for the unexpected. Here are five steps that you should follow to ensure that your home purchase and your financial future are both secure.

Create an Emergency Savings Account

Before you sink all of your savings into a house down payment and monthly mortgage payments, you must ensure that you have enough set aside to cover you in the case of an emergency. Traditional wisdom dictates that you have between three to six months’ worth of your salary in savings that will remain untouched unless you lose your job or fall into serious financial hardship. This buffer can give you amazing peace of mind.

Pay off Debt

Even before building up your savings, you should pay off all of your debt, especially consumer debt from credit cards. This is because debt can significantly lower your credit score, making you pay a higher interest rate on your mortgage. Additionally, the interest on credit card debt is far higher than the interest on any type of savings account.

Shop around for a Home Loan

When it comes to looking for a home loan, do not choose the first one that you are offered. Instead, get a second or even a third offer from a variety of companies. A home loan company is there to help you out. Some financial institutions may have different things that they look for on your credit report and thus, may be able to offer you a lower interest rate.

Plan for the Unexpected

Once you purchase your home, set money aside regularly for home maintenance. Now that you are no longer renting, you will be responsible for all repairs on your property. Keep in mind that home appliances and building materials do not last forever and will eventually need to be replaced.

Get a Good Home Insurance Plan

Never choose the cheapest insurance plan that you find. While you may love the monthly payment, you will not love it when something happens and it does not cover the cost of all of your belongings plus your home. Consider having an insurance evaluator to your home to estimate the actual value of your home’s contents.

Purchasing a home can be a solid decision for a strong future. You can purchase it as an investment, for tax benefits or for your own sense of belonging when you finally have a place that you can call your own. By building these good financial habits and taking time to find the best way to build this investment, you can rest assured that you will be financially secure long into your future.

Leave a Comment

Time limit is exhausted. Please reload CAPTCHA.

comm comm comm