How To Set a Budget While Buying A New Property - Nicholas Statman

Purchasing a property such as a house or an apartment is one of the most significant investments that you are likely to make throughout your lifetime, according to Nick Statman. It is important to put down your budget before you begin your search so as to avoid being stuck with a mortgage you cannot comfortably meet. Here is how you can set your budget effectively;

Understand How Much You Can Afford As a Down Payment

The down payment is one of the largest expenses that can be incurred when purchasing a home, according to Nick Statman. This is a percentage of the total property price you are expected to pay at the initial stage. As for a down payment, it is traditionally calculated for a typical home as 5-20% of the full price. Find out the maximum amount of money that you can come up with in terms of a down payment by way of saving and/or investing.

Factor In Closing Costs

Besides the down payment, there are also closing costs when closing a property purchase. These are costs for processing the loan, appraisal, inspection, attorney costs and the like. It is important to note that closing costs may amount to between 3%-5% of the total price. You should always consider this while preparing funds so that you can cater for these expenses when closing the deal.

Consider Monthly Mortgage Payments

When you find out the kind of down payment you can afford, estimate your payment per month on the remaining balance on the mortgage. To prevent being “house poor”, make sure that your estimated monthly payment falls within your current income and, at the same time, leave a little space in order to cater for other necessary expenses in life as well as saving.

Furnishing Expenses

Budgeting should also involve costs of transport as well as the first purchases of furniture necessary to start occupying the space. This can easily cost a few thousand dollars, according to the expertise of Nicholas Statman. These costs should be estimated to be higher when preparing the budget so as to adequately cater for all the other expenditures that may be incurred when one is contracting new property.

It’s always wise to set some allowance for emergencies such as repairs, sudden changes in HOA fees, and an increase in property taxes, among other issues. Always ensure that you do not over-strain yourself when setting a price limit for a property to be bought. Find more space in your monthly budget, and it might also be useful to create a specific home emergency fund.

 

Conclusion

Sticking to this budget when acquiring a new property means one will not be able to spend more than they have planned for, according to Nick Statman. Cost control is another vital aspect when it comes to purchasing a place since considering all the possible costs that are associated with the purchase prevents one from getting financially outclassed later in the future. It’s important to be very disciplined with the budget numbers when you are searching for property.