Buying a Home is a Process Part Two – Items to Include in Your Budget

The previous post covered expenses involved in owning and maintaining a home. This week (yes I know we were going to go over homebuyer classes, but I got ahead of myself), let’s take a look at current budget items for potential homeowners.

“Knowing where you are is a good way to get to where you want to go.”

Mama Yas

What is Income?

Income includes all of the money coming into the household, from all family members 18 years or older.

Begin now to save pay stubs, bank statements, divorce and separation decrees, disability, social security and insurance award letters. You’ll need these documents when you apply for a mortgage loan.

Income Items for Your Budget

Take Home Pay/All family members

Child Support/Alimony

Pension/Social Security

Disability/Other Insurance

Interest/Dividends

Other

Total Income

(Add the amount of all items to determine your total monthly household income before taxes and other deductions.)

Preparing to Compute Your Expenses

Gather together receipts and bills from several months to compute your monthly expenses. When you can it is always better to use a factual amount rather than guessing or estimating expenses.Set up manila folders for rent receipts with a copy of the related check or money order stub attached. Include folders for pension contributions and statements, savings and checking account statements, car payments, pink slips for vehicles you buy or sell, credit card payments and student loans.

Expenses Items for Your Budget

Rent/Mortgage (include taxes, principal, and insurance)

Life Insurance

Health/Disability Insurance

Vehicle Insurance

Homeowners or Other Insurance

Car Payments

Other Loan Payments

Savings

Pension Contributions

Groceries

Utilities (gas, water, electric, phone, cable, internet, satellite service)

Credit Card Payments

Car Upkeep (gas, maintenance)

Clothing

Personal Care Products

Medical/Dental/Prescriptions

Home Maintenance

Recreation, Entertainment and Dining out (include work lunches)

Child Care

Education

Charitable Donations (include tithes and zakat)

Miscellaneous Expenses

Total Expenses

(Add the amount of all items to determine your total monthly household monthly expenses.)

 

Income Should be Greater than Expenses

Deduct your total expenses from your income. Your income should be greater than your total expenses if only by a few dollars.

Now, that you know where you are you can begin planning for where you want to go. Hopefully that includes a new home in the near future. Glad to be on the journey towards that goal with you.

 

The author, Yasmin Sabur, is the founding member of My Home Down Payment, an e-education business that offers advice and information on affordable housing for first time homebuyers. MyHomeDownPayment.com is a national directory of down payment assistance programs for low-to-moderate income families.