Buying a home is a huge step. One that you should have already done plenty in preparation of. But it’s not always as straightforward as you might like. Even if you’ve done your research and set your budget, it’s easy to see expected costs keep growing and growing. It’s not enough to estimate. You have to prepare for a lot of additional costs and the potential savings you could find to make living in your new home not only cheaper but profitable.
Strategize your mortgage
A lot of people will make the mistake of jumping at a mortgage as soon as they find out they’re eligible for one. However, waiting a while could get you a much better deal. We’re not just talking about comparing different providers, either. Instead of paying the minimum required down payment, you could wait to save up for a bigger payment. Doing so means that your future mortgage payments will be a lot smaller than if you went for the minimum. You should also carefully consider the terms of time on those mortgage payments, too. You might think you’re buying yourself more time, but you’re paying very dearly for it. Longer payment terms will drastically raise the interest on your mortgage. That’s why most people go for the three-year contract as standard.
Don’t confuse your budget with what the bank offers you
If you’re taking out a loan and you get pre-approved for a surprisingly large amount, it’s easy to get excited at the prospect of the kind of home you’re able to buy. But don’t let the dollar signs blind you to the truth. Make sure you work on a budget and decide how much you’re willing to pay first. It might mean taking out less than what a bank is offering you. If you bust your budget, you will be paying for it for years to come. Keep yourself grounded and stick to your guns even if it seems like you have more than you expected.
Don’t forget the sleeper costs
One thing that budget needs to account for is that buying a home requires a lot more than just agreeing on a mortgage and putting in the down payment. For instance, you’re going to need help with conveyancing, which doesn’t come for free. You should also budget some aside for the possibility you will need to hire a home inspector, perhaps even more than once if you don’t decide to buy the first home that you inspect. There are plenty of costs that need to be factored in the long-term, too. So, don’t ignore potential costs like any repairs you need to do, or the kind of property tax you’re going to be paying. Ensure you know the boundaries of the property and how they factor into your finances before making any agreements.
Expect the unexpected
Always ensure that a bit of your budget is left untouched after buying the home and considering all the costs that might otherwise remain hidden. You need some money left to deal with any unexpected costs that might come out of the woodwork. For instance, you might end up having to pay more for moving services, or you might find yourself having to replace some aspect of the HVAC system. Some of the more essential costs can be covered by a home warranty agreement. For others, you should always have options open, like the ability to take a loan. Even if your credit is bad, you should know where you’re able to source money if you really need it.
Get bill smart
There are also those bills that you should definitely expect. While you should budget to prepare for the full costs, that doesn’t mean that you shouldn’t work to see if you can’t make them a little more manageable. When it comes to your water, heating, and energy bills, it’s all about getting green. Fitting in more eco-friendly appliances and fittings might be an investment at first, but they can see huge long-term savings. Then you should look at your contracts with your other service providers. Negotiate your agreements with your cable TV and internet providers. See if you can’t change the deal by negotiating yourself into lower bills. It’s a good idea to keep an eye on any subscriptions you have going. Track them each month and see whether you still use them enough to justify keeping them around.
Choose insurance wisely
You’re going to want insurance on your home. There is no doubt about that. But as with the mortgage, you shouldn’t pick the first insurance deal that comes your way. For one, consider getting home insurance from someone who already provides insurance to you in some way, whether it’s for your car or your income. Package deals can save you a lot of money, after all. Don’t just consider how much it costs but how much it covers as well. For instance, a deal might cost a little more but offer optional extras like loss of use and liability insurance with only a small addition to the standard.
Treat the home like an investment
Just because you’re being money-smart doesn’t mean that you have to stop yourself from spending on improvements to the home. Once it’s your property, it’s an asset that could be of tremendous value to you, especially if you decide to sell it. It’s a good idea to set aside a part of your budget for ongoing home improvement. Not every improvement is going to require you to spend money, either. If you’re willing to get hands on with some DIY, there’s a lot you could do to increase the value yourself. Some projects that could add value include building your own decking or patio, doing some crown molding and even making little additions to the garden like bird feeders and stone gardens.
Every decision you make regarding buying and owning a house are going to have big long-term implications on your finances. Don’t neglect to consider the risks and the gains you could make before you make any decision on insurance, investments, or budgeting. There’s no rush worth jeopardizing your finances for.
