Buying a new home comes with financial risks, no matter how ready you are. There's liability, increased cost of living, unexpected stress, and more time commitments. Yet the benefits are equal to the risks. Owning a home can also be a good way to build wealth.
Here are 5 basic financial tips you need to know if you plan to buy a home in Albuquerque.
Prepare Before Purchasing
You've probably noticed by now how fast homes come and go on the Albuquerque real estate market. This might make you feel that you have to jump on a home before you're ready. But you need to prepare before you start making offers on homes.
Get your finances in order. This includes paying down outstanding debts, setting an accurate budget for daily living, and having a clear picture for what you can truly afford. Once you've done this, take the time to save for a larger down payment. Zero-payment down loans and small down payment loans are out there, but they come with many strings attached. There will always be opportunities to buy later, when you're ready.
More Square Footage = Higher Cost Of Living
Considering buying real estate to increase your living space? Besides the added cost to your monthly mortgage payment, plan for increases in these bills as well:
- Homeowners Insurance
- Heating and cooling costs
- Larger heating and cooling unit maintenance
- Water for home and lawn maintenance
- Larger appliance repairs
- Property taxes
- Home furnishings and renovations
Budget For Unplanned Repairs
On top of your increased cost of living, you also need to consider the cost of unplanned repairs. How do you plan for a repair you don't know about yet?
Home repairs will be needed on a regular basis. The cost for these repairs will vary widely. But especially with a larger home, you will need to plan on high repair costs as cooling, watering, plumbing, electrical, roofing, etc. are all more extensive systems. While planning your finances for purchasing real estate, add into your budget a savings for home repairs.
Regularly Inspect Major Appliances
It's a wise idea to set aside money to regularly inspect major appliances like water softeners, water heaters, home heating and cooling units, and more. Doing so will save you money on huge repairs later, and keep your home running more smoothly.
Build Equity With Larger Mortgage Payments
Many home buyers in Albuquerque will go with a 30-year mortgage as it costs less per month. But you end up paying a lot more interest this way over the term of the loan. The ideal route for purchasing a new home is with a 15-year fixed rate mortgage (unless you have cash, then forget financing!). If that isn't possible, making an additional mortgage payment at least once a year can help to dramatically lower the interest you pay on the overall loan.