Budgeting, something that sounds so simple yet not many people can or want to do it. And the more they procrastinate, the more they rush to create a budget plan for whatever they’re trying to achieve. That is not healthy and could ruin your financial situation even more.

A budget is something that you plan way ahead before you need it. So when you finally need it, you can follow it without panicking and get a taste of what it feels like to be in control of your money. This is especially important for people who are planning to purchase a house or homeowners.

Obviously, purchasing a home requires a lot of money and planning. There may be hidden expenses that you are not expecting as well. It’s not uncommon for new homeowners to be surprised at these hidden expenses and forced to scrape for more money. Here are some tips that you can follow to budget for a new home and easy mortgage payment.

Start before you buy

Buying a home requires a lot of time and energy. If you start budgeting as you search for a new house, you could be exhausted in the process. And if you start budgeting early, you can get a better understanding of how much money you have and what kind of house you can afford. If you can afford a medium-sized house, you certainly don’t want to waste your time searching for a large-sized house.

So it’s important to figure out how much house you can afford. Get a good look at your savings account and income flow for the next few years. Don’t forget to make sure that your emergency funds are untouched. Make sure you get everything from income to expenses.

One good theory is that you shouldn’t spend more than 28% of your monthly income on a house and 36% on debts, including credit cards, mortgages, and others. Obviously, everyone’s situation is different, so feel free to adjust accordingly.

Make a large down payment

After you’re done with your early budget plan. It is time to commit with a large down payment. If you put down more money, you can lower your mortgage bill. This is a great solution that every new homeowner should know. You can eliminate private mortgage insurance with a 20% down payment. This is why you need to budget early – to find out if you can afford the 20% down payment or not.

Make a plan for upkeep and upgrades

Owning a house isn’t the end of your journey. You still have to make a plan for upkeep and potential upgrade somewhere down the line. Repairs and maintenance could be cheap or expensive, depending on the state of the house. Regular maintenance could be cheaper than repairs, but you need to be meticulous about it.

You can, of course, make everything more affordable by buying a house that is in great condition. Many homeowners got surprised by the actual state of the house that they just bought. Like the roof needs to be repaired, leaky faucet, or even worse, termite infestation.

Nowadays, the costs for repairs and maintenance are higher than before, so you should be extra careful. Make sure that you have enough money for upkeep for the next two years at least. As for the upgrades, you decide when and how much.

Housing emergency fund

You may already have a personal emergency fund; it is the same thing with your new house. A housing emergency fund is needed to make sure that you always have the money for repairs and maintenance. Put aside some of your money each month for housing expenses, so you can always be ready for anything. Considering how some problems in your house can get worse if left alone, this emergency fund is crucial to make sure your house is healthy and habitable.

Conclusion

Creating a budget for a new home and mortgage payment can be scary at first. But I guarantee once you start the first step of creating a budget, you won’t be able to stop. It can be fun and daunting at the same time, yet, everyone needs to do it.