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New Year, New Home? 12 Budgeting Tips To Secure Your Dream Home in 2022

Buying a home is one of the most significant investments you will make in your life. If you are thinking about taking the leap and moving into the world of homeownership in 2022, you are certainly not the only one. As the pandemic hit, the number of people or families who decided to buy a home increased by 2.1 million in just over a year!

While buying a home can be extremely exciting, this decision can have an impact on your financial situation and lifestyle. Knowing how to prepare in advance for this important choice is essential to have the funds necessary for the down payment, get the best loan, and enjoy a stress-free homebuying experience. 

Understand Your Current Finances and Start Saving Early

Your current finances can determine how much money you can use for the downpayment and what kind of property you can secure for your family. While, so far, you might have been doing just fine with a rough budgeting plan, now it is time to understand how much money is coming in and how much you are spending every month!

If you are planning to buy a home in 2022, the earlier you start budgeting, the better. If you are unsure where to start, you might consider the benefits of the 50-20-30 rule:

  • 50% of your paycheck is destined for essentials such as rent, food, and gas
  • 30% is your disposable income
  • 20% should go towards your savings

Reconsider Your Lifestyle

Most people tend to live beyond their means and overspend. While in the short term this can bring benefits, it can truly push our entire financial situation off balance! Instead, deciding to go frugal and simplify your life can help you save more, cut down on unnecessary expenses, and reset your priorities. Some tips to live more frugally include:

  • Embrace minimalism in your home and life
  • Compare different prices
  • Avoid impulse buying 
  • Find stability
  • Opt for buying second hand
  • Focus on quality, not on quantity
  • Follow the right budgeting tips

Be Clear on Your Priorities

When scanning the market for a home to buy, it is easy to feel overwhelmed by the choice. However, the most affordable or convenient listing is not necessarily the one that comes at a lower price. To know if you are investing in the right deal, consider your priorities. 

For example:

  • How many rooms your home should have
  • Minimum square footage
  • Facilities
  • Presence of a garden or yard
  • Garage of driveway
  • Energy rating
  • Price range
  • Location 
  • Accessibility 

You might not be able to find a house that ticks all of the boxes for the price you want. However, understanding your priorities is essential to avoid regrets and end up spending more in the future. 

Understand What Hidden Costs You’ll Face 

One of the biggest issues first-time homebuyers face is the realization that there are hidden costs. Indeed, you might have been budgeting for the house’s asking price, but the added costs to buying a house can increase the price you will have to pay by over 5%.

Luckily, these costs can be expected and estimated. Some of the ones to watch out for include:

  • Mortgage-related fees, including application and mortgage broker fees
  • Closing costs
  • Maintenance and repairs
  • Taxes 

Make Sure Your New Home Is Not a Financial Burden

Buying a home does represent a significant financial commitment. However, as the housing markets around the world continue to grow, a house can also represent a safety net and positive investment. 

Nonetheless, it is crucial for you to budget for the upcoming expenses and avoid housing options that sit above your means. After all, an expensive house can quickly turn into a burden for you and your whole family! 

Continue Working on Your Credit Score

Your credit score will determine what your house buying experience will be like. The credit score is built over time, and it takes into consideration many factors, including:

  • Your overall financial situation
  • Your ability to keep up with payments
  • Debt to income ratio
  • Credit card usage
  • Credit history length
  • And credit mix

Your credit score is a simple number that can determine how much you will be able to borrow from a lender and how good your interests and repayment terms will be. Since the credit score is updated each month, in just a few months you can build a much better image of your financial situation to present to potential lenders. 

If you are struggling with poor credit that is preventing you from securing the mortgage loan you need, learn about 7 ways to increase your credit score quickly in this WiseLoan guide. 

Find Professional Assistance

Finding professional assistance is essential when buying a home – especially if you are a first-time homebuyer! In particular, you should focus on finding an experienced and trustworthy estate agent. 

Of course, not all estate agents have a great reputation, but you can certainly find an estate agent that is truly willing to help and can assist you in finding the right property for your needs. Additionally, thanks to their network and list of contacts, they can help you check out properties even before they are released on the market. And, more importantly, avoid the risks involved with buying a house directly from a private entity. 

Some of the ways in which you can ensure that the estate agent you have picked is reliable and trustworthy include:

  • Asking for recommendations to family members and trusted friends
  • Checking out their website, testimonials, and online reviews
  • Understanding their certifications, qualifications, and fees 
  • Getting to know them 

Invest in the Services of a Mortgage Broker

Paying for the services of a mortgage broker might seem like an unnecessary expense, especially if you are operating on a tight budget. Nonetheless, a mortgage broker can help you secure the best loan terms, thus helping you save over the next few years. They can do so thanks to:

  • Their knowledge of lenders – even those that are not on the high street!
  • A nationwide network of partners and lenders
  • Knowledge of the application process
  • Their area of specialization can help you get an advantageous mortgage even if you have a bad credit score.

One of the reasons why you should truly consider partnering with a mortgage broker is that they can help you get your mortgage application accepted the first time around. In turn, this reduces the chances of seeing your credit score and chances to secure a mortgage penalized by refusals! 

Pro tip – if you are unsure about what mortgage to get to avoid financial struggles, keep in mind the 28% rule! This rule says that your mortgage should not be more than 28% of your monthly income. 

Don’t Skimp on a Home Inspection

Home inspections can represent a significant cost for homebuyers. In the US, the average cost of a home inspection according to Home Advisor can go from $280 to $400. However, hiring a home inspector or advisor is well worth the price! 

During the inspection, the advisor can help you understand the real value of the house and how much renovation, repair, and maintenance costs will be. In turn, partnering with a home inspector can help you be prepared to face future costs and even ask the seller for a lower, more suitable price that reflects the current conditions of the home.

Some of the aspects that a home inspector will check during an inspection include:

  • Wiring, plumbing, and wastewater connections
  • Roof and structure conditions
  • Estimated repairs
  • Immediate and future issues

Hiring a home inspector is particularly important if you have never bought a house before and you are not sure about what aspects to check before committing to a purchase. 

Wait for the Right Moment

As the pandemic hit, millions of people and households in the US decided to buy a house. While this has caused a house market boom, it has also caused the price of houses to skyrocket. Therefore, buying a house today means buying it at an all-time high. 

If you are looking to add a layer of security and stability to your whole lifestyle, this could just be the right moment for you to invest in a house. However, if you’re just looking to extend your investment portfolio to the real estate market, you might not be able to see the returns expected. In this case, waiting for the house prices to drop could be more convenient. 

Negotiate on the Price

The asking price is never the price you will pay in the end – and the seller will expect you to negotiate! Learning how to negotiate professionally can help you walk away with the property of your dream at a price that is just right for you. At the same time, a successful negotiation will leave the seller happy!

Get Your Home Insurance

No matter what price you have paid for it – buying a home is a significant investment for your whole household. And, it can truly influence your entire lifestyle! However, once you have closed the deal and you are ready to move into your new family house, you should not think twice about getting an all-encompassing home insurance policy. This can help you protect your investment and ensure that your family, home, and belongings are safe no matter what!