By Jamie Mades

Recessions are typically times of financial uncertainty. Big purchases, like buying a home, have the potential to put you in a tough spot if you’re not careful. Find out how you can set up your finances to handle tough times before you buy.

1. Negotiate a Lower Price

There’s an old maxim in real estate investing that says, ‘You make your money when you buy.’ It’s a good rule for homeowners, too. Getting a better price on your home opens a lot of financial doors. Aside from having a lower monthly payment, you’ll start off with more equity. This can mean potential emergency funds from a home equity line of credit. It also gives you the flexibility to sell your home quickly if the need arises, since you could accommodate a lower asking price.

2. Don’t Max Out Your Payment

Before setting your sights on a home, figure out how much you can afford, then factor in a comfortable cushion. Big expenses have a way of popping up when you least expect them. Be prepared by creating a monthly surplus and resist the temptation to spend it. Here’s a good rule of thumb: Set aside 10% of your monthly income for emergencies and major purchases. Place it directly into your savings account for those rainy days. Creating a financial cushion can keep an expensive month from turning into a financially disastrous one.

3. Calculate All Home Expenses

Consider all home expenses when factoring your budget. HOA fess, energy bills and basic upkeep and maintenance are often overlooked when you’re calculating monthly expenses. Get this information ahead of time by asking the seller or your realtor for a copy of all expenditures associated with the home. If you’re buying in the summer, be sure to review bills from the winter and vice versa. With this information in hand, you’ll be able to confidently forecast the home’s true monthly expenditures.

4. Buy a ‘Greener’ House

Certain styles of architecture can be particularly costly to heat. Pricey culprits are high vaulted ceilings, outdated heating and A/C units and older buildings. High ceilings swallow a lot of unused heat before warming up the rest of the room. Obsolete furnaces and air conditioners can be extremely inefficient and use a lot of energy for very little return. Older homes often lack quality insulation and have windows that can suffer tremendous heat loss. Take these ‘greener’ features into consideration when buying and you could save hundreds of dollars a month.

5. Pay on Time

Credit can be a life saver if times get tough. Unfortunately, missing a few payments will seriously affect your credit score and take a long time to recover from. Here’s a tip: Use online banking with automatic payment plans, but be sure to double check your expenses every month. Pay your bills on time and ensure that credit is there when you really need it.

Purchasing a home can have a big impact on your finances. Protect your financial future with smart planning and good buying choices and you’ll be set for smoother sailing in troubled times.

About the Author: Jamie Mades is a Real Estate Agent in Colorado Springs with a background in mathematics and corporate training. If you’d like to learn how to be a smart buyer in any economic condition, ask him at his site Colorado Springs Homes for Sale.

Source: isnare.com

Permanent Link: isnare.com/?aid=232018&ca=Real+Estate