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Last Updated on June 12, 2024
A permanent home is one that many a family has always aspired to acquire. However, the path leading up to it is not one that is easy and simple. A house is one of the most expensive purchases that you are going to make in your lifetime. It’s also a major milestone that defines whether or not you’ve been able to establish yourself as an adult properly.
Say you want to buy one of the new homes in Montgomery, TX. The first step will always be the most difficult because you’re often left with no direction in which to start. Well, these are the most essential things you need to consider when you want to buy your first house. And here are some answers to questions like how long does it take to buy a house.
Target Budget
As with any purchasing plan, you need to determine how much you’re going to need for your house. The best way to do is to consult a mortgage lender. This way, you’re able to find out how much you can qualify for in terms of mortgage. Using a house buying power calculator can also help you better understand your financial position and set realistic expectations.
There are two general rules to follow when determining your target. First, you need to make sure that whatever the total of your budget is (even with the mortgage), you have to be able to come with at least 20% of it. This is because, while it’s true that you can pay less, 20% is generally the sweet spot that keeps monthlies as low as possible without increasing your interest rate.
The other rule to consider is that the expense for your house should never exceed 28% of your monthly income.
Time Frame
It’s nothing more than simple calculus, really. The main question to ask here is “how soon do you want a house?”
Naturally, the shorter time frame you give yourself, the higher your annual saving goal needs to be if you’re going to ensure that you’re going to be able to meet your target.
Money Saving Method
It’s true that there are many ways to earn money. The lure of quick cash is strong, but you need to always remind yourself that everything you do will always be a dice’s throw between risk and reward. Naturally, the higher the risk, the higher the reward.
You need to thoroughly research and possibly minimize any risk-type investments such as stocks, cryptocurrency, real estate investing and FOREX. The worst thing that can happen to you is not in missing your timeframe, but rather, losing the money that you were supposed to buy your house with.
A savings account and a certificate of deposit are both the best ways to save for a house (and for any important purchase, to be honest.)
Contingency Funds
You should always have an emergency fund ready, whether or not you’re saving up for a big purchase. You shouldn’t assume that everything is going to go as planned. There will be emergencies that may come up as you save for your house. It can come in the form of a major car repair, medical bills, and the like. Having a buffer meant for these circumstances allows you to deal with these situations without having to compromise your house money.
Automated Savings
Some people are better at saving than others. For those who aren’t gifted with frugality, a common solution is to automate how your income is allocated. It’s essentially the same principle as that of a 401k plan. With an automatic process, you also avoid the temptation to spend any extra funds you may have left.
