3 Practical Tips For Buying A House Without Breaking Your Budget

Buying a house can be a costly event that you should not rush into. If you long to own a home but want to make sure you are financially smart about this purchase, you will need to prepare for it and make good decisions. Here are three practical tips you should follow as you begin preparing to buy a house.

Pay off the debt you have

If you currently rent a house or apartment, you are probably used to the way the expenses work relating to your rental property. You will pay your monthly rent and the utilities, but that might be all you have to pay. When you own a house, you will also be responsible for insurance, taxes, maintenance, and repairs. While you may be able to plan for some of these things, there may be others that pop up out of nowhere.

To make sure you are financially smart about buying a house, it is best if you can pay off all the debt you have before you buy a house. This primarily includes all the credit card debt you owe, but you may also want to get other debts paid off, such as student loans or car loans.

Figure out how much you can afford

The second practical tip to follow is determining how much of a house you can afford, and you can use a mortgage calculator to do this. A good rule of thumb is to make sure the house payments you have are equal to 25% or less of your monthly income. For example, if you earn $5,000 a month, you should make sure the house you buy will have payments of $1,250 or less per month.

Choose a 15-year loan instead of a 30-year loan

If you can buy a house and repay the loan in only 15 years, you will cut the time in half of what it would be with a normal 30-year loan. This will help you pay your house off faster, and it will result in paying less in interest over the loan.

If you combine this principle with spending 25% or less of your income on your mortgage payment, you will be able to buy a house the smart way.

As you get ready to buy a house, you may want to call a real estate agent to help you locate homes that fit into your budget amount. Contact a company like TW Homes to learn more.