Rocket Mortgage and Popsugar did a study to take the pulse of what home buying timelines look like for women around the country. The pandemic is still shaping the way everyone feels about the perfect home. The current times have also put a spin on the study’s outcome. Setting a realistic budget is one of the first focuses of the process.
Women are taking more time to make sure they research what they want and how confident they are in obtaining it. Most want to establish a healthy budget and pay off their debt. Rocket Mortgage has many successful tools and ideas that can help women create a solid budget to lead up to homeownership.
Dig deep when it comes to a budget. Don’t just focus on things like car payments, rent credit card bills, or cell phone plans.
“Pull up your bank account and credit card statements to really understand how much money is going to things like shopping, entertainment, groceries, gas, and utilities,” Katie Barish, Rocket Mortgage’s Executive Vice President of Purchase said.
The first step is gap analysis. Gap analysis is the “gap” between your goal cash flow and the cash flow you have coming in now. To get this look at your total savings goal and break it down monthly. Look at your numbers which are how much you have going in and how much going out. Be realistic, this means you might have to make some sacrifices. Make a list of what you can and can’t live without and hold yourself accountable to that list.
The biggest thing to remember when budgeting for a home is that it’s not just a one-time expense,” said Barish. “This is a long-term investment that goes beyond the down payment.”
Focus on having enough cash to make your down payment, closing costs, appraisal costs and escrow payment is important along with your monthly mortgage payment. A mortgage professional is the best way to go when anchoring your budget for purchasing a home. A professional can also keep you on your toes by reminding you of all the costs associated with purchasing a home.
Maintenance costs will also need to be included along with renovations or updates. You will not only have to mow the lawn and decorate your new home but you will have things that need to be fixed throughout the years. Appliances will break, or gutters will need to be replaced. Taxes will also go up each year so you will need to take this into consideration.
“It is really important to prioritize these ‘needs’ as opposed to ‘wants’ and realize that this is your house, and you can spread the upgrade across years as your budget allows,” said Barish.