Planning Your Finances for Real Estate Ahead of the Holidays
October 27, 2020
Planning a home-purchase is exciting, especially if it’s your first time doing so. There are more costs than what the listing says online. As you pursue homeownership, consider planning your finances around the holiday season.
After all, you’re probably planning on spending some money on gifts. Here’s what you need to consider when planning your finances around purchasing a home during the holiday season.
Attaining a Mortgage
Purchasing a home comes with a number of costs, not just what’s on the listing page. For most homeowner’s you’ll need a mortgage. To get a mortgage, you’ll have to reach out to lenders, such as a bank or lending company. Luckily our preferred lender Patriot Mortgage works hand-in-hand with us, so the process is smooth and simple.
These lenders will issue an interest rate depending on your work history, debt-to-income ratio, and credit score. Having consistent work, low-to-zero debt, and a high credit score will mean you get a low-interest rate.
That’s good! The lower the interest rate, the less you’ll pay month-to-month on a home. Once a lender pre-approves you, you can know what they’re willing to lend you for a mortgage. However, this pre-approval is subject to change depending on your credit score. If it falls during the home-buying process, a lender can back-out, causing you to lose the contract. It is always advised to not make any large purchases such as buying a new car during the home purchasing process, the less debt the better!
The Additional Costs of Home Ownership
Now that you’ve found a house and are interested in buying it. Here are some of the variables that go into the final cost of a home:
• Down-payment on the home
• Home insurance (paid monthly or annually)
• Closing costs
• Inspection fees
• Mortgage insurance (if your down payment is below 20% of the home’s purchase price)
• Any immediate maintenance required to make the home livable
Now that you’ve calculated that, how much liquid income will you have on move-in day? Liquid income is the amount of cash you have saved, money that is available to you at any given moment.
Ideally, you should have a healthy emergency fund available, roughly three to six months’ worth of income depending on your family situation. If you have less than this, factoring in the cost of your new mortgage, start saving immediately.
If you don’t have an emergency fund after the purchase of a home, you may want to consider purchasing a less-expensive home. Homes often come with unexpected bills right off the bat such as, higher utility bills, internet bills, one-time installation fees, and maintenance services. Good thing that all Tropicana Homes come with a 1-year fully covered warranty. Our award-winning warranty team will walk you through all the items that are covered and give you the time frame for structural warranties.
Planning Your Finances for the Holiday Season
Purchasing a home around the holiday season introduces more costs.
Do you purchase presents for your extended family? How much are you willing to spend?
There are several ways to limit holiday spending, but the best place to start is by evaluating how much you’re willing and able to spend.
With your new monthly costs in mind, compare them to your monthly sources of income. How much can you reasonably spend this year? Do not dip into emergency funds.
Happy Holidays and Happy Homebuying!
Homeownership requires planning your finances so that you have a safety net in case something drastic happens. If your monthly costs do not outweigh what you’re making each month, you could be ready for homeownership.
If you’re currently looking for a home in the El Paso area, contact us. We have several communities and floorplans available to suit all home buyers. And if you do buy, consider the home an amazing present to yourself, a present that will last for generations