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    Setting Up a Budget to Buy Your First Home

    Setting Up a Budget to Buy Your First Home

    Besides marriage, buying a home is one of the most important decisions that you will ever make in your life. Indeed, it’s an exciting time, but before you run off and begin searching for your new home, a budget needs to be decided. So our question to you is, “have you created a budget to determine how much you can afford in order to buy your first home?”   Sure, there are online apps out there which can help you determine your affordability status. However, these tools usually show values based on your total income, credit score, and debts. In reality, you are the only one who knows just how much you can afford to pay every day and every month.

    And so, to be able to determine the budget that you can spare for your first home, you need to analyze your current financial situation. An honest self-assessment of your day-to-day needs, bills, and expenses will provide you with a clearer picture for your home buying budget.

    Nowadays, the median price for homes in Durant, OK range from $100,000 to $200,000 which could give you anywhere between a 2 to 4-bedroom home. While these prices tend to be higher in some other states, and these figures are provided merely to give you an idea, it’s important that we do an example budget based on living in Durant to bring everything together.

    For example, say your total household income/take home pay for a family of four is $5,000. This amount will be divided into your household expenses. Let’s get started…

    Credit Cards/Student Loans/Car Payments= $500

    Child Care = $600

    Food = $500

    Rent = $850

    Clothing = $150

    Utilities = $350

    Gas/ Transportation = $400

    Health Expenses = $300

    Recreation = $400

    Miscellaneous Expenses = $550

    Savings = $500

    Total: $5000

    A $140,000 home in Durant, OK could cost you around $900 a monthly (including taxes and fees) with a 3% down payment. This estimate was done on an online home affordability calculator based on an excellent credit score and a 30-year fixed mortgage.

    Home financing analysts suggest that an affordable mortgage payment should be below 25% of your disposable monthly income. Based on the combined income of 50,000, that is $1250 worth of home payments per month.

    With a few adjustments on the sample income above, we can arrive at a new budget with you as a home owner of a $140,000 home:

    Credit Cards/Student Loans/Car Payments= $500

    Child Care = $600

    Food = $500

    Monthly Mortgage = $900

    Clothing = $150

    Utilities = $350

    Gas/ Transportation = $400

    Health Expenses = $300

    Recreation = $400

    Miscellaneous Expenses = $550

    Savings = $450

    Total: $5000

    So, can you afford to pay a mortgage of $900? Definitely, yes! Now the only question is where you will get the initial funds for the down payment and closing costs. This is where planning comes in.

    It is recommended that you should start saving for a home at least two to three years before you start looking around. A change in lifestyle geared towards saving as much money as possible is highly recommended. Spend less money on recreation and consider taking additional jobs to add to your down payment fund.

    While looking for additional sources of funding, you should lower your DTI or debt-to-income ratio. Pay your credit card bills and refrain from seeking any other types of loans which could hurt your debt-to-income ratio.

    Fortunately, getting a home in Durant, OK is a lot more affordable than in other cities and states. Thanks to local lenders and government assisted funding programs (please see my other articles on specific programs that can help you buy your first home), you can reach your home buying budget faster. There are also cash gifts available for first-time homebuyers, aside from the mortgage loans.

    A knowledgeable real estate agent by your side can help you learn more about available home assistance programs that can turn your home ownership dreams into reality!  Our hope is that you’ll come to know us as your knowledgeable real estate agents whether you’re selling or buy a home.  Call or email us today! 

     

    Setting Up a Budget to Buy Your First Home

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