When You Plan to Buy Foreclosure For Sale

Are you tempted to buy a foreclosure for sale? As a renter, you had been constricted to the rules and regulations of your landlord. You cannot paint, attach hooks on the walls and change your kitchen cabinets. Add to that the monthly expense for something that it is not really yours in the long run. It might be more practical for you to buy something that is pre-owned, but not as expensive as a newly built house. A condo perhaps? A single detached? The choices might be numerous, but one thing must be definite: you must be able to afford the cost of paying for your mortgage on a regular basis or else your future acquisition may also end up as a foreclosure for sale.

Have a financial plan

Yes, buying a foreclosure for sale may save you some money, if you are lucky enough to have a good deal on a property that does not require a major overhaul. But then, it does not mean that buying your own home is a one-time, big-time affair. It requires careful planning on your part. It is most advisable that you budget your money and have a long-term plan for you to be able to afford it.

First of all, do a spreadsheet of your finances. Do a balance sheet of your cash flow and expenses every month. With that, you would be able to track how much you are really earning and saving monthly and annually. By mapping out your finances, you would be able to determine how long you can carry the mortgage and other debts you have incurred before dealing with the terms of your loan for the foreclosure for sale you intend to purchase.

Budgeting

In your spreadsheet, categorize what are the kind of expenses that you have monthly and quarterly. Separate the necessities like phone bills and/or Internet, electricity, water, and grocery from the wants like cable subscription, Netflix, magazines, newspapers, etc. Separate the discretion spending like iTunes purchases, books, movies or nights out, vacations, etc. Have a big column for the automatic spending like emergency savings (good for 6 months expenses up to one year in case you get laid off), student loans you are still paying for, rent (which would be replaced with “mortgage”), taxes and retirement savings.

You cannot compromise your automatic spending, and the amounts are usually fixed. If you find yourself a little tight, then you have to eliminate some or all of the discretionary spending and the “wants”. Under the “wants”, you can downgrade your subscription, substitute or cancel. In the “necessities”, you can eliminate some or downgrade like phone bills and Internet, save on electricity and water or shop in bulk and save some money when doing the grocery shopping

This way you would see how much debt you can take on to be able to buy the foreclosure for sale you have been eyeing. Even if you get a raise, maintain the monthly expenses for the necessities and wants, but you can add the amount of money you have been socking away for emergency savings and debt payments.