Eventually owning your own home is the dream of millions, if not tens, of Americans across the nation. For some though, it seems like a possibility far-fetched from reality. Indeed, this isn’t the case. Smart budgeting and understanding each facet of successful home-owning habits are essential to eventually owning the roof above your head, instead of leasing it for a short period of time.

From applying for a loan to being financially stable enough to pay it off, the road to going from home buyers US to homeowner US can be met with danger. Let’s go over the bare necessities for a successful homeowner, shall we?

Understanding Your Budget

Careful bookkeeping is vital to a healthy budget. First, you should find out what your total income is, based on your job after taxes and fees. Essentially, figure out how much money you take home each month. If your income fluctuates, make an average out of the past three months or more to get a better idea of approximately how much money you can expect to have each month consistently.

Next, map out all of your expenses that aren’t related to housing. These include food, savings, clothes, electricity and water, transportation costs, medical costs, outstanding debt, and anything else you spend your income on. Look at your bank records for the past few months and see how much of your budget goes where. The goal is to minimize expenses while maximizing savings. Speaking of outstanding debt, you shouldn’t be looking to buy a house if you have an outstanding debt from another source. Having no debt burden before buying is a common trait of successful homeowners.

Get to the point where you have nearly every dollar accounted for, and put all “loose dollars” into the savings pile. Then, subtract your monthly non-housing expenses from your total monthly budget. This is how much money you can spend on your mortgage each month. A portion of that money should be subtracted to be put away for repairs and maintenance. Also, the general rule of thumb is that your housing expenses shouldn’t exceed 25% of your monthly pay.

Savings are significant because if your foundation cracks or your car breaks down, you’ll need to be financially stable enough to fix these problems without defaulting on mortgage payments.


Use a Mortgage Calculator

The next step once you’ve figured out how much you can feasibly spend on a home is to use a mortgage calculator to find out the most expensive house you can afford. Obviously, you’d prefer receiving the best possible deal on a house, but you need to know the absolute most you can pay, and still keep your head above water.

The right mortgage calculator will allow you to plug in the price of the home, how large of a down payment you’re going to provide, how long the mortgage will be, and finally the interest rate of the said mortgage. Depending on where you live, your bank will likely have an online mortgage calculator with their interest rates already plugged in, so you won’t need to hunt for them yourself.

Now, use the mortgage calculator to figure out the most you can pay. Your down payment shouldn’t be less than 10% of the total value of the house, and as far as down payments go, higher is better. The calculator will show you how much you’ll be paying each month. From there, you can figure out if you can pay off the mortgage on the house you’re looking at, or perhaps even look for a nicer house if you can afford more than you initially thought.

Managing your budget and applying it to the best of your ability will ensure you’re on the road to being a homeowner, and not on the way to foreclosure.