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How To Budget For Buying A New Home With Ryan Homes

Posted by Kelly Jacobson on Jul 11, 2017 9:00:00 AM

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It’s easy to feel overwhelmed when you decide to buy a new construction home. How’s the energy efficiency? Do you want to add those upgrades? Are the amenities worth the HOA community fee? Does this move positively affect your commute?

With so many decisions to make, budgeting for a home adds to the seemingly never-ending stress -- but it really doesn’t have to. Using some common sense guidelines, Ryan Homes at Brunswick Crossing breaks down exactly how to budget for a new construction home: 

  1. Add up every source of income you receive each month, and list the numbers in gross and net columns. This will become important when you sit down with your Ryan Homes sales consultant, since he or she will be able to help you understand the tax benefits you can realize when you switch from renting to owning. We'll use a fictional couple, John and Mary, as an example of how to calculate income:

    Monthly Income:

    Gross (before payroll deductions)           
    John’s Paycheck 1 = $ 
    John’s Paycheck 2 = $                  
    John (Miscellaneous) = $
    Mary’s Paycheck = $   
    Mary (Miscellaneous) = $   

    Total monthly income = $                                                            

    Net (after payroll deductions) 
                                                         
    John’s Paycheck 1 = $ 
    John’s Paycheck 2 = $                  
    John (Miscellaneous) = $
    Mary’s Paycheck = $   
    Mary (Miscellaneous) = $   

    Total monthly income = $

  2. List your household expenses. A big chunk of your paycheck probably goes to retirement, student loans, car payments, and other big expenses. To figure out how to adjust your budget to make a new purchase feasible, write down every household expense per month. Be perfectly honest about the money you spend monthly. This will provide a great tool for review and adjustment throughout the years:

    Current Budget
    Charitable Gifts = $
    Savings =  $
    Rent = $
    Utilities = $
    Internet & Cell Phone Service =  $
    Groceries = $
    Eating Out = $
    Clothing = $
    Car Payment = $
    Car Insurance = $
    Transportation = $
    Medical = $
    Personal =  $
    Entertainment/Recreation = $

  3. Calculate the cost of homeownership compared to rent or free housing. A good rule of thumb is to budget about 25 percent of your net income for the entire monthly payment, which includes principle, interest, property tax, home insurance and HOA fees. Remember, net income is “take-home pay”.

    Tip: Start getting accustomed to the new monthly payment by setting aside that amount each month, as if you were already paying it. This will help you to form the habit.

  4. Think about the future. Your income and expenses may not allow you to purchase your ultimate dream home the first time around. That’s OK. Starting out with a home that will serve your needs for the next five to ten years will give you a sense of pride, the tax benefits of homeownership, and a new goal to work on.

  5. Be prepared to make adjustments. In order to achieve the goal of homeownership, you should consider spending less on frivolous expenses like recreation, clothing, and other personal purchases. This doesn’t mean you can’t have fun; it just helps you to prioritize your purchases.

If you want to layout your income and budget to start preparing for a new home purchase, download Ryan Homes at Brunswick Crossing’s spreadsheet for buying a new home by clicking on the button below:

Download the Guide to Buying a New Construction Home

Topics: Your Home, home buying

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