3 Budgeting Tips for First-Time Homebuyers

by Connie Dunlap 06/06/2018

Want to buy a house for the first time? Create a budget, and you can move one step closer to transforming your homebuying dream into a reality.

Now, let's take a look at three budgeting tips that every first-time homebuyer needs to know.

1. Don't Wait to Start Saving for a Down Payment

In most instances, a down payment on a home ranges from 5 percent to 20 percent. With a large down payment, you may be able to reduce your monthly mortgage expenses.

A lender may be more willing to provide you with a favorable mortgage if you can afford an above-average down payment. This means if you have plenty of money for a down payment, you could save money over the life of your mortgage.

2. Take a Look at Your Outstanding Debt

Student loan charges, credit card bills and other outstanding debt may make it tough for you to get the financing that you need to buy a house. Fortunately, if you pay down your outstanding debt as much as possible, you can boost your chances of buying your dream house.

Evaluate your current spending and make cuts if possible. For example, if you dine out several times a week, it may be more cost-effective to buy groceries and cook your own meals. Then, you'll have extra money that you can use to pay off outstanding debt and save for a house.

3. Understand Your Credit Score

Do you know your credit score? If not, you may be missing out on opportunities to eliminate outstanding debt and increase your home savings.

You are eligible for a free annual copy of your credit report from each of the three credit reporting bureaus (Equifax, Experian and TransUnion). Take advantage of this perk, and you can receive insights into your credit score.

If you obtain your free credit reports and find outstanding debt, you should try to pay off this debt sooner rather than later. Because the longer that you wait to pay off outstanding debt, the longer it may take you to acquire your ideal residence.

Furthermore, if you discover errors on a credit report, contact the reporting bureau immediately. This will enable you to fix any report errors before you get a mortgage.

If you need additional assistance as you map out a homebuying budget, it often pays to collaborate with a bank or credit union. In addition to providing you with multiple mortgage options, a lender will offer expert recommendations to help you budget for your first home purchase.

Lastly, don't hesitate to reach out to a real estate agent as well. This housing market professional is happy to help you get in touch with the best lenders in your area. And when you're ready to kick off your inaugural homebuying journey, a real estate agent can provide you with the support you need, precisely when you need it.

Use the aforementioned tips, and you can establish an effective homebuying budget.

About the Author
Author

Connie Dunlap

Personal I am originally from Ohio but please don't hold that against me. :) I moved here with my husband in 1978 and we raised three sons who all graduated from Grosse Pointe South High School with an excellent education. I received a Dental Hygiene certification from Ohio State University and a B.A. degree in psychology from Wayne State University. My current hobbies include spending time with my family, needlework, learning French, and volunteering with the Junior League of Detroit, Operation Smile, and Grosse Pointe Memorial Church. Professional I have been a licensed Realtor since 1987 and an Associate Broker since 1990. I specialize in representing my clients in the purchase and sale of single-family residences and condominiums in the Grosse Pointe communities. I truly love this area and pride myself on my knowledge of current transactions, school districts, neighborhood information, and related services, including mortgage, insurance and inspection information. I am a customer driven Realtor dedicated to achieving results and providing exceptional service. If you are in the market to buy or sell a home, I will put my 31 years of real estate expertise to work for you! Certifications and Recognitions [email protected] certification [email protected] Graduate, [email protected] Institute ABR - Accredited Buyer Representative CRS- Certified Residential Specialist RAM- Real Estate Alumni of Michigan e-PRO- Advanced Training in Technology