What to Budget When Buying a Home

There are a number of costs that you need to budget for when looking into buying your first house. Expenses tend to add up quick if you aren't prepared for what the process looks like. Below are some tips on some common things you need to budget for when thinking about buying a home.

• MORTGAGE. First and foremost, you want to make sure that your monthly mortgage fits your budget. Knowing what you're approved for is great but knowing what that means for your monthly bills is what's really important. Your mortgage will include the following items. Principal and Interest, PMI (if you didn't put 20% down), property taxes, and insurance. Additionally, if you're purchasing a home in an HOA, you will have some HOA fees that are directly paid to the HOA. A good way to calculate your monthly mortgage is to ask your realtor, ask your lendor or use this handy website/app. *When using the website/app, consult with your lender or realtor on the taxes and insurance. KARL'S MORTGAGE CALCULATOR

• DOWN PAYMENT. Figure out what you want to put down on a house. This typically ranges from 0% up 20%, depending on the type of loan you obtain. You can put more down if you're in a position to do so. The more you put down, the less your loan and monthly payments will be. Additionally, if you put at least 20% down, you won't have to pay that pesky PMI (mortgage insurance).

• CLOSING COSTS. Closing costs are the costs you pay to obtain the loan (escrow fees and finance fees). These costs are paid at closing and are typically 3-5% of your loan amount. Use this link to get a rough idea of your closing costs. Make sure to scroll down to see the break down of the closing costs after you get your final numbers. CLOSING COSTS CALCULATOR

• MOVING COSTS. Make sure you budget in your costs of movers when you are budgeting for a new house. Best practices are to call around and get a few quotes, make sure you have everything boxed up and ready for a "fast" move (since they charge by the hour) and use a company that has insurance in case they break anything. Additional moving costs would be any termination or setup fees from your utility providers.

• REPAIRS FUND. You definitely want to have a fund for repairs on your home because things do go wrong. Usually your realtor will negotiate in a 1 year warranty for you so a lot of smaller items will be covered in the first year. At a minimum, you want to make sure you have enough saved up to cover your insurance policy deductible. Personally, I do the highest deductible because the chances aren't very high that you will have to use it. This just means we have a higher home savings in case of emergencies.

Now for the fun stuff!!!

• HOME PROJECTS. More times than not, the home you buy will need some personal touches. Maybe it needs new paint, updated flooring or even a new fence. These things will add up QUICK if you didn't budget for them. Make sure they're in your budget if you don't plan on buying a completely move-in ready home.

• FURNISHINGS. This is a big one for your first time home buyers. You're coming from a 700sqft apartment to a 2,000sqft home! It's super exciting and you're going to have so much room! With that extra room comes some extra costs. You'll need to furnish extra dining areas, bedrooms, bathrooms and living rooms. Don't let this stress you out! I know everyone wants everything to be ready right when you move in but it is a process. Take your time to furnish the home. No one is staying in those extra bedrooms anyways! We took 6 months to get a formal dining table and it just served as some extra play room until then.

• WASHER/DRYER & FRIDGE. Another big one for your first timers. Sometimes you can negotiate these items into the sale but you won't know until that times comes so better to budget upfront. If you're like me and you want to save a couple $$$, go to a best buy or sears outlet store or even scour FB marketplace. Usually you can find some lightly used ones for 1/2 the price!

Buying a house is SUPER exciting but you want to make sure, financially, you are in a good place and ready. These items should set you in the right direction!