Want to know the impact of having a stable housing cost? We talk about the expected benefits of having stable housing costs and how you manage them.
Buying a house will be a unique experience for you. While being excited to uplift your lifestyle and customize your home according to your preference, there will be things that may burst your excitement. If you list them down, one of the top ones will be your housing costs.
Yes, you would know there is a long list of homeowner expenses that you have to deal with. But what about the unpredictable expenses? These housing costs out of nowhere can cause headaches for you as the expenses will exceed your budget.
You would have to play damage control and manage your cost. To know how you can do it, you are at the right place for answers.
Here, we will talk about the advantages of having stable costs in changing housing market, followed by suggestions about how you can achieve this stability.
So, let's dive into it.
Here, we look at some perks of stabilizing your cost.
When you know about your housing costs, you will get a clearer picture of how much finances you can spend and how much you have to save. That allows you to invest your saving in improving your physical and mental well-being for living a better life.
You can do that by using the available financial resources to invest in your hobbies like sports activities, working out in the gym, or partying with friends. These were just a few examples.
It doesn’t end here. If you know how to manage your housing costs, you can invest in the productive upbringing of your children. Yes, the housing market will play a role, especially if it’s down. But you’ll know if you can send your children to school, without facing financial stress.
Otherwise, if you keep spending without budgeting for it, that may not end well.
Do have to buy the necessary stuff, but you also need to save money? Well, when you have a budget to deal with stable housing costs, things will be clearer.
Instead of being surprised by unexpected expenses, you can spend money on necessary items and assets to make your life better.
For example, suppose you have to fix a pipe that’s leaking water. But you are not spending money on fixing it as you don’t know when an unpredictable expense might pop up.
If your housing cost is not stable, you would think twice before even making one of the expenses. Why? Because you will be unsure about the funds you will need for emergency expenses.
We have talked about living a good lifestyle for yourself and ensuring it for your family. The thing is, it’s not only about securing your present. You need to think long-term as well and also ensure a pleasant future for yourself.
This may include saving your finances for retirement life, leaving enough funds behind for your children, or investing money in an entrepreneurial venture for future returns.
Since you know that your housing costs are stable and there won’t be unexpected expenses, you will likely have the finances to secure your future.
We suggest creating a realistic roadmap and achievable targets to keep track of your progress and meet your goal on time.
Mortgage increase, landlord asking for a higher rent, emergency expense arising and you don’t have a budget for it, these are some of the unwanted situations you may face. But not to worry. These are only the things you will face in an unstable housing market.
When you know your housing costs and how to deal with sudden expenses, you can breathe a sigh of relief. You can save a lot of your finances to use elsewhere.
These can be home improvements to appreciate your property value, home utilities, and investing in assets for long-term returns.
When your expenses are known, you can ensure to make your payments on time. These can be credit payments or any other pending debts. And apart from having the burden off of their shoulders, there will be another benefit waiting for you.
You can increase your credit score and prove yourself worthy of additional loans at favorable terms. The lender will know that you’re good at managing credits and repaying your debts. You can even have solid grounds to negotiate and strike a better deal for yourself.
Explore: Calculate Your Monthly Mortgage
In the housing market, it’s a common rule to not spend more than 30% of your gross monthly income. This helps you decide the property type, the location, and if renting or owning a home will work for you.
And when we say 30%, it’s not just your monthly rent and mortgage payments. These include all the housing costs and debt repayments that you need to bear after you’ve moved in.
If these housing expenses exceed your gross monthly income, you may want to cut down on your spending or generate another income source.
Yes, you would want to predict every housing cost that is coming your way. But sometimes, the changing housing market means you’ll have unexpected expenses coming your way.
These can be things like medical emergencies, losing your job, or urgent home repairs. It is a situation where having a cushion in your budget will be like a breath of fresh air.
Generally, you can have a 20% to 30% emergency funds, in addition to your original budget. Make sure to assess your budget and spending patterns every month, and make changes to your emergency budget accordingly.
One way to account for the unstable housing market is to pay off most of your debt at the start. And one of the first upfront payments when buying a house on a mortgage is the down payment.
This down payment may start from 2% of your total home purchase price. You must be wondering what the maximum limit of the down payment is, right? Well, that doesn’t exist. You can pay as large a down payment as you wish to own a large chunk of equity.
A significant down payment means your monthly mortgage repayment will decrease and so will your housing cost. This allows you the freedom to allocate a higher budget to other necessary spending.
So, if you’re thinking to buy a house in the near future, start saving your income to pay a large down payment.
It’s like they say, don’t judge a book by its cover. If you get an adjustable mortgage rate that is very less, you might think it’s too good an offer to decline.
But that happiness might be short-lived and diminish soon. Why? Because an adjustable mortgage rate means it can be increased anytime. This might be because of the housing market fluctuation or some other reason. If that happens, your mortgage affordability might get affected as it will exceed your budget.
So, to have a stable housing cost and keep your expenses without your budget, we suggest you don’t go for an adjustable mortgage rate.
Explore: Calculate Your Monthly Mortgage
Keeping your eyes and ears open to what is going on in the housing market can save you a lot of money. You will have time when the housing market will be down. That means things like rental rates, property tax, and mortgage interest rates are down as well.
This knowledge about the real estate industry can help you in:
You can get updated knowledge about the real estate industry by reading publications and news. Another source of learning can be talking to real estate agents who have been in this industry for a long time.
If you want first-hand experience and know about the property prices, you can visit open house events happening near you.
Having a stable housing cost is the key to living a stress-free and desirable life. That was the reason why you opted to make the investment of moving into a new home, right? You’ll have a better understanding of how to have a stable housing cost and what are the perks you can experience.
For expert suggestions about how to manage your finances and make the right real estate investment, real estate agents from HAR are waiting to hear from you. We will guide you on your path to making informed investment decisions.
Stabilizing your housing costs offers several benefits, including improved life quality, the ability to prioritize purchases, long-term financial stability, easier savings, and a potential increase in your credit score. It allows you to plan and manage your finances more effectively.
It's recommended not to spend more than 30% of your gross monthly income on housing expenses. This includes mortgage or rent payments and all related costs. If your housing expenses exceed this limit, consider adjusting your spending or seeking additional sources of income.
An adjustable mortgage rate is a type of mortgage where the interest rate can change over time. To maintain stable housing costs, it's generally advisable to avoid adjustable rates. Fixed-rate mortgages provide more predictability and stability in your monthly mortgage payments.
To create an emergency budget, set aside 20% to 30% of your original budget to handle unexpected expenses like medical emergencies, job loss, or urgent home repairs. Regularly review your budget and spending patterns to make necessary adjustments to your emergency fund.
Stay updated on housing market trends by reading publications, following real estate news, and talking to experienced real estate agents. Visiting open house events and networking with real estate professionals can provide valuable insights into property prices and market conditions. This knowledge will help you make informed financial decisions.
Subscribe to our monthly newsletter for up-to-date real estate industry trends, news, and insights.
Saved
