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How to budget for a home purchase

Budgeting for a home.

It may be alarming to you when changes are coming down the pipeline regarding interest rates if you are trying to buy a home. 

However, we want to share why now is an excellent time to buy a home and how to budget for a home purchase. 

Since 2005, the market in Laramie County has expanded. Real estate investments have been excellent, with no significant drop but a value increase. You can consider each home purchase a “piggy bank” because of the equity gained. While the market has changed, you want to consult a lender and real estate agent. Their knowledge can help you tailor your home-buying process to meet your needs and budget. As Dave Ramsey’s Endorsed Local Provider (ELP) for Cheyenne and the surrounding area since 2009, Steve Prescott shared his tips for saving money to buy a home.

7 Steps for Buying a House:

  1. Save for a down payment.
  2. Find a real estate agent.
  3. Get pre-approved for a mortgage.
  4. Go house hunting.
  5. Submit an offer.
  6. Get a home inspection.
  7. Close on your house.

Here is the breakdown of how to budget:

  • Down payment: We recommend putting down at least 10% on your new home, but 20% is even better because you avoid private mortgage insurance (PMI). That’s an extra cost added to your monthly mortgage payment, and it doesn’t go toward paying off your mortgage balance.
  • Closing costs: We recommend you save 3% of a home’s purchase price for closing costs. Closing costs are the fees charged by title companies and lenders involved in your real estate transaction. Prepaids cover any prorated property taxes and insurance items.
  • Moving expenses: These can vary from hundreds to thousands of dollars depending on how much you’re moving and how far away your new home is from your current place. To help with budgeting, you can call moving companies in your area for quotes ahead of time. If you plan to make updates to your home—like repainting, installing blinds, or buying new furniture—you’ll need cash for that too!

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