Budgeting 101: How to Plan Your Budget Around Your Monthly Mortgage Payments
If you've decided to invest in a home, you might be wondering how to make all the expenses work from the groceries to your mode of transportation to all those little things that quickly add up. Fortunately, it's easy enough to ensure you have the money each month by calculating your expenses and ensuring there's a little wiggle room in the leaner times. Here are the details on how to begin with your mortgage budgeting plan.
Calculate Your Monthly Payment
Whether you've just purchased a home or are trying to determine if your dream home is right for you, it's very important to establish approximately what your monthly payment will be. It's important to have a mortgage cost that is sustainable, so add up your payment, home insurance, property taxes and your interest rate. While this should give you an estimate, you'll want to ensure you add extra room if you are taking advantage of an adjustable rate mortgage.
Determine Your Necessary Expenses
It's easy to be idealistic and assume that you'll be able to come up with the money for your ideal home, but it's very important to keep your feet on the ground and be realistic about your budget. Once you've determined your payment, calculate the average amount for your utilities, transportation costs and any debt you have. You'll also want to add in groceries, toiletries, and extras like gym passes, meals or entertainment. By adding up your monthly payment and your expenses, you should be able to determine if a house is realistic for you.
Leave A Little Extra
If your expenses and your home costs add up to balance out, that's great, but it's also important to leave some wiggle room in your budget for the other things you'll need. While you'll want to ensure you're saving money for the future, if you have any short-term life goals like a travel destination or going back to school, you'll need to leave a bit for the month-to-month. The unexpected can occur at any time so you'll want to have some leverage for the times when the car breaks down or there's a medical issue.
When investing in a home, it's very important to know that you can make the monthly mortgage payment and still have enough left over to pay your expenses and save for down the road. If you're currently preparing to buy, you may want to contact one of our mortgage professionals for more information.