Buying your first home is an exciting time for any new homeowner, whether you’re buying with someone else or as your first step onto the property ladder. That being said, it is, of course, a big expense: it might be the biggest purchase you ever make. That’s why it’s never been more important to budget carefully, to make sure you stay afloat and keep the house of your dreams. Here are five tips for budgeting specifically for new homeowners.
Do research into loan options
No matter where you are in the world, be sure to look into all home loan options that are available to you. Australian financial advice site, Savings.com.au, has tons of useful advice on how to compare variable and fixed rates and what this could mean for your budget and finding a lower interest rate.
A fixed interest rate loan will make sure that your interest rate will not change throughout the life of the loan, whereas a variable interest rate fluctuates according to specific benchmarks or indexes that are updated regularly. That means the overall sum of your variable rate loan may change according to the interest rate, but the monthly payment on your mortgage will likely stay the same. Understanding these differences and when it pays off to take either one of these loans is vital before making any decisions on a private loan, loan term, or repayment options.
Buy quality for a long-term payoff
It can be tempting when decorating your home to save money and cut corners by buying low-cost items to kit out your home. However, you might actually end up spending more overall when you have to spend more to replace lower quality items. For staples and important items, it’s smart to choose a high price tag when you know it’s going on good quality, like these cruelty-free faux fur rugs from Chesserfeld.com.
They have the look of real sheepskin or other options depending on what would be a good fit for your home and interior taste, with the right blend of fibers for a thicker pile, softer texture, and more warmth than many competitor versions made from real animal products. They make for a fabulous housewarming gift for yourself or a friend, getting the look of authentic sheepskin without the animal cost.
Make your mortgage payments a priority
It might sound like an obvious piece of advice, but your mortgage payments need to be your top priority. A home lender can sometimes foreclose on your home after just two months of late payments, plus your credit score will suffer big time, meaning that the initial interest rate for any future loans will be much higher. If you end up feeling the strain and struggling to make ends meet, don’t be afraid to seek financial aid before you end up skipping payments.
Have an emergency fund
We can never plan for the unexpected, but we can try to be as prepared as possible. An emergency fund is one way to safeguard yourself as a homeowner. Set aside a regular amount each month should an unexpected accident occur, like needing to make house repairs or pay for medical expenses. You want a cushion to support you and to make sure that your mandatory bills and monthly payments don’t fall by the wayside in times of crisis.
Plan regular budget reviews
Schedule in regular budget reviews. It doesn’t help if you notice financial trouble once it’s already past and done. You need to see your expenses and be aware of any budget discrepancies as they are happening, so you can plan ahead and fix any issues before they become larger problems. Knowledge is key: stay clued in to what’s happening in your bank account.