There’s a common misconception that, as a homebuyer, you need to come up with 20% of the total sale price for your down payment. In fact, a recent survey by Lending Tree asks
4 Tips to Simplify Your Budget When House Hunting
Dated: September 7 2021
Envisioning what your dream home will look like is exciting. With so many people interested in buying a home in this unpredictable market, simplifying your budget is important to consider.
When faced with a milestone in life as big as purchasing a home, you should start by simplifying and organizing the process to better prepare yourself for homeownership. Minimalism can be very handy for organizing our thoughts, finances, and ultimately the entire house hunting process. It can even set you up for success with maintenance and other aspects of your home as well. That said, here are some actionable tips on how to simplify your budget when searching for homes.
1. Understand Your Goals
Throughout your house hunting journey, ask yourself make-or-break questions before buying a home and determine what your essential needs are. Talk to your family about any expectations they might have and consider asking these questions:
● What features would I like to see in my home?
● What are my priorities?
● What kind of lifestyle do I want to live?
These questions, although simple, get to the root of what truly matters. Without fully understanding what you need and want, you can't start simplifying the house hunting process. By establishing clear wants and expectations, your budget can begin to take shape. Knowing what features are deal-breakers can help you determine what you’re willing to splurge on.
- Organize Your Finances
Organization is key to clarity. Having a system for monitoring and understanding your spending habits can put you on the fast track to setting a ceiling for your budget. When searching for a home and determining your budget, ensure that you’re sticking to an affordable price range. Determine what’s important to you and understand your current spending habits to see if there’s room to cut back.
One way to see how you’re distributing your funds is to organize your spending based on categories. Organizing your finances is a lot like organizing your personal belongings, with each expense dedicated to a specific group. This will help you determine what you’re spending the most on, and you can start with these categories:
● Home internet
When you can see your expenses laid out in front of you, it can help you feel more confident in your money management. Are you spending too much money eating out? Have you gone to one too many movies recently? This can give you a better idea of what you can afford to spend on your home, and also areas where you can decrease your spending to make more room for mortgage payments.
Keep in mind you’ll want to strike a harmonious balance and be able to cover all of your living expenses comfortably. To get a more concrete idea of what your home's monthly payment breakdown would be, you can check out what a mortgage preapproval entails. Really nailing down what you can afford can help you focus and stay true to your needs and budget.
Just like organizing your finances, organizing your possessions can help you simplify your house hunting budget as well. Do you really need this many towels, this many pairs of shoes, or this many collectibles? Why would you be asking yourself these questions when trying to simplify your house hunting budget? Well, the volume of your material possessions directly impacts the amount of space you need in your new home, and ultimately the price tag.
Take inventory of your belongings by conducting a household audit. By sifting through your items, you'll be able to weed out the clutter in your life, de-stress, and be able to scale back your budget for your new home. By decluttering, you may not need the extra bedroom or storage space you once thought were must-haves, and may realize a smaller home may suit your needs. There are surprising ways minimalism can save you money in a big way, and less stuff also means moving will be easier when you do find your dream home.
- Be Practical
When looking at homes, it’s easy to be swept away and captivated by grand spaces and extravagant amenities. You may be tempted to envision what you could do with an extra bedroom, a pool, a finished basement, or other features. However, more square footage does not necessarily equate to you being more comfortable. Instead, you’ll probably end up stretching your budget or overspending on flashy features you don't actually need.
Prevent the temptation to splurge on unnecessary home features by going back to your original goals and needs. Stick to your budget and think practically about what amenities you’ll actually use on a daily basis. It’s likely that a home movie theater or gym may go untouched depending on your lifestyle. Learn how to make the most of the space that fits your needs, and keep in mind that you can always make renovations to your home later on.
When navigating the house hunting process, setting your budget is a big step. Especially now, you may feel the need to act fast with other bidders in the picture. However, remember to slow down and set your budget in stone before being caught in the emotion and excitement of house hunting.