Arranging a Smart Home Payment Plan
Arranging a smart home payment plan can be a tedious, stressful and confusing task, but in truth, it really shouldn’t be. It only comes down to understanding your options and selecting the best of them.
We will break it down into a number of simple steps, starting with the preliminaries…
1) Shop for a Home that is within your Means
This applies only if you have not yet bought your home, of course.
The most important thing is to be realistic and to not try to live beyond your means. The mortgage and banking crises we’ve been experiencing these last 12 months largely come down to foreclosures as a result of people being approved for loans that they were not able to pay back. Simply put, buy a home that you can afford, and make sure you’re ready to be a homeowner before making the commitment.
2) Make a Budget and stick to it
This step applies if you are living on a fixed income: Calculate your income and expenses. Set a budget for everything from food to clothing to the gas you put in your car, and do not go a dollar over so far as you can help it. If this means switching to generic brands, so be it. Every dollar counts. Write out shopping lists and estimate the total costs, rounding up as you go. The same goes with all other expenses. Know what you’re spending, cut what isn’t necessary, and keep as much money in your pocket as you can.
3) Make a Checklist
You’ll need to write down some facts before you begin arranging your payment plan.
a. How much do you make on average every month?
b. What is the total cost of your home?
c. How long do you expect to live in this home?
d. What are your average monthly expenses? (check the budget you made in step two)
4) Study and Negotiate your Mortgage
Know your mortgage inside and out, top to bottom, and don’t be afraid to negotiate and renegotiate until you’re happy with it. Don’t submit to a mortgage plan that places unrealistic expectations on you.
One might think “the lower the payments, the better the deal”, but that’s not necessarily the case. If you are on a limited income, that may well be for the best, but remember, the lower the payments, the higher the premium. If you’re buying a home as an investment in the hopes of reselling it once the value has risen substantially, you will want to shoot for lower premiums, even at the expense of paying more per-month.
5) Determine how much you can pay each Month, and how much you want to pay
Take out your checklist. Subtract your average monthly living expenses from your average monthly income. Now, that’s what you can pay, but paying every last dollar you have is not what you might call a smart payment plan. This brings us to how much you want to pay each month.
Look at the checklist again: How long do you expect to live in the home, and what is the total cost?
This is fairly simple, actually. If you hope to move out before you’ve paid for the home in full, and you’re not buying the home as an investment but rather you simply need a comfortable place to live, then the lower the payments, the better.
However, if you hope to turn this home into an investment or buy the home outright as a permanent residence, then the question becomes slightly more complex. In this case, you want a low premium, so it will be wiser to take a larger monthly payment, so long as you can comfortably cover the costs, in exchange for a higher overall profit for yourself.
Stay Informed
There is more ground to cover on this subject, but the above should serve as an introductory guide to the basic facts of arranging a smart home payment plan. Every home buyer has different expenses and different resources, and what may be a smart plan for one may not work in any way, shape or form for another.
In summary: know your budget, know your expenses, know your mortgage, and most importantly, know your choices and make the best one available to you.
