How to Set a Budget for Buying a House in St. Albert
You've saved your money, worked hard, and are now thinking of buying a house in St. Albert, AB. However, it's easy to become overwhelmed when you're out there comparing house prices and the cost of living in the area you've chosen to move to in St. Albert.
While there are many considerations for a first-time house buyer to consider when choosing their St. Albert home, you first need to consider your budget. The better your budget is, the more options for houses it will open up.
If you're living in St. Albert and searching for the best home for you and your family, read on below for a few tips on how to set your budget to get the most bang for your buck.
Follow the 25% Rule
Your St. Albert house budget should begin with checking into the 25% rule. This means that your mortgage payments shouldn't exceed 25% of your income in any given month. If you follow this rule, it will help you create a budget that you can work with and still find the home you deserve.
Sit down with pen and paper and determine if your mortgage, expenses, and debts exceed 25% of your income. If they do, then you need to refigure and reevaluate. Living within that 25% rule will ensure you can have a comfortable life and still make your mortgage payments on time.
Add Up Your Income
It's impossible to create a budget if you don't know how much you have to spend. Determine how much you earn each month, and then determine how much of that income you're spending monthly. For example, if you're spending over 80% of your income on non-essentials, this will tell you where you need to trim spending.
If you find that you're spending way too much on entertainment and eating out, then this is where you'll start trimming so that you can afford your mortgage.
Determine if You're Ready to Purchase a Home
Once you've added up your income, you need to think very seriously about whether you're ready to purchase a home. Owning a home is much more expensive than renting. For example, as a homeowner, you're responsible for the taxes, insurance, and any repairs that are needed around the home.
If the HVAC unit goes on the fritz, you're responsible for fixing it because you don't have a landlord to fix it for you. If you're ready to take on that amount of responsibility, then it's time to move on with planning the rest of your budget. Buying a house is a huge responsibility. If you're not ready for it, you'll in up ruining your credit.
Whittle Away at Your Debt
You want to create a budget that allows you to pay down your debt while still saving money to purchase your house. You will need excellent credit to qualify for a home loan, and you may have to shop around for a lender or even apply for a second preapproval on your home loan.
The less debt you have, the easier it'll be to find a home in St. Albert that you can afford, and the easier it'll be to get approved for a home loan. It's best to cut out all extra spending, put money out there to decrease your debt, and save for your new home at the same time.
Consider Other Homeowner's Expenses
While you're whittling away at your debt and saving for your St. Albert home, you need to create a list of additional expenses. The increase in spending doesn't stop with a mortgage payment. There are a ton of expenses associated with being a new homeowner.
Homeowners' insurance, utilities, everyday maintenance, and major repairs are just a few of the expenses you need to budget for before becoming a new homeowner. A $1,600 mortgage may fit into your budget comfortably.
However, an extra $1,600 a month in expenses to maintain that home might put you outside of your comfort zone. Take the time to consider those extra expenses and add them to your budget.
Purchase a Property You Can Handle
While you're considering the budget for purchasing a home in St. Albert, you also need to consider the size and condition of the property you're purchasing. While you may think you can handle a fixer-upper and want a large home for growing your family, sometimes the property is more than you can handle.
A huge home means a higher heating and cooling bill, and a fixer-upper means added expenses that might not be affordable. If you're thinking of purchasing a 3,000 sq ft home, check into the utility bills of the ones you're considering. If you're looking into a fixer-upper, have a construction expert come in and evaluate exactly how much it'll cost you to fix it up.
If these properties are going to break your budget, you need to consider saving a little longer or buying something more within your means.
Most lenders expect a 20% down payment on whatever home you purchase, so make sure you add that into your budget. The more of a down payment you can afford, the less expensive your mortgage payments will be.
Just know that your budget to buy your home in St. Albert isn't set in stone, especially if you're beginning to save for a house. However, if your budget shows that your mortgage would exceed the 25% rule, you need to tighten your purse strings or start looking for less expensive property, one that will fit into your budget.
Buying a House in St. Albert?
If you're living in St. Albert, and are looking for your dream home, then you're in luck. Once you've created your budget, save your down payment, and decided on the size of home you want, contact us for tours of the best house on the market today. We have houses in St. Albert, Spruce Grove, and the surrounding areas.