What to Consider When Choosing a Budget Before Searching for a New Home

Choosing a budget prior to looking for your new home is a crucial step in the process, and it's one you need to take seriously. There's more involved to owning a home than just making enough numbers line up to match the price tag of a home you want.

You need to stay within certain guidelines. Otherwise, your home may own you more than you own it.

Start With the 28/36 Rule

NerdWallet argues in favor of starting with the 28/36 rule in terms of home affordability. Factor 28% of your gross income every month towards housing-related costs, but stay within 36% of your total debts. 

This rule doesn't actually apply to everyone and every situation, but it's a good rule of thumb to start with.

Work With a Mortgage Lending Service

Doing your own initial budget is a great start, but it helps to have an industry professional take a second look. Not only can they confirm the accuracy of your budget, but they can also give you an objective look regarding your finances. 

Whether you work with Fairway PNW in Silverdale, WA, or another service closer to where you are looking for a home, working with a mortgage professional increases your odds of balancing buying the most home you can without breaking your budget in the process.

Make the Biggest Down Payment You Can

The larger your down payment is, the lower your monthly mortgage payments will be. In many cases, you might be able to buy a home without the standard 20% down. 

However, if you can afford that or more, then you might be able to avoid private mortgage insurance and the monthly costs that will entail.

Financing Upkeep

Regardless of the age, condition, or size of your next home, it's going to need upkeep and maintenance. Repairs will creep up on you eventually, too, and you'll likely have many ideas about home improvements. 

As a general rule of thumb, you should set aside 1% of the home value every year for such matters. It's better to do 2% for older homes.

Buying a home is a tremendous accomplishment in life. However, if you don't choose your budget right before searching for your next home, then you might wind up overburdened and with a quality of life that you don't enjoy in that home. 

Even worse, you might get in over your head and risk losing the home you worked so hard to get your hands on.