How much should you spend on your rent or mortgage?

No more than 30% should be spent on your dwelling. That means that renters should include rent, insurance, and utilities into that 30%. For the homeowners that cost would need to cover your mortgage payment, homeowners insurance, utilities, and your monthly taxes. You should break up your income into these 5 categories Housing 30%, Debt 15%, Life 25%, transportation 15%, and savings 15%.

Housing – Make sure you do your homework when looking for a house or an apartment.
Renters - When looking for an apartment sometimes it is better to look close to colleges. A lot of times these apartments are cheaper because their demographic would be students or recent grads without deep pockets. Sometimes you can make deals with landlords so don’t ever be afraid to ask for money off rent, or your first month free. Make sure you get renters insurance. Most insurance companies will give you a bundle deal when you bundle renters insurance with your auto insurance. Most people would think they would never need renters insurance they believe the land lord will pay for everything which in fact most wont. Renters insurance can cover the cost of your valuable items in your house should you lose them due to a natural disaster or a fire. Renters insurance will also pay for a hotel for you to stay in until your property is move in ready again. When I was going through State Farm Insurance, they bundled life insurance, auto insurance, and renters insurance in one low price. Broken up individually I was practically getting the renters insurance for free. Check with your landlord to see what services they will cover. Most landlords will cover some of your bills whether it’s trash, water, gas, sometimes free cable or internet. The more your landlord will cover with your rent, the more money you can have for your life section of your budget.

Homeowners – When looking for a home, make sure you are staying within your budget of 30% this must include your utilities, homeowners insurance, property taxes, and mortgage payments. Make sure you look into your property you will buy with the amount of money you’re putting into owning you want to make sure it will be a home you will love in an ideal location for you. Homeowners insurance is a must have, and like renters insurance, homeowners insurance can also often be bundled into your auto insurance for less. When buying a home always try to offer what you want to pay, and a lot of times you can get the seller to pay all or some of the closing costs on the home. Do your research and make sure you find out what similar homes or homes in the area are going for. Do your research when getting financing towards your mortgage. You can apply for several banks to finance your purchase and find the lowest interest rate. When looking for a home your credit report will report these inquiries as one when they are done in a short time period (about a month), therefore will not lower your credit score by many points. You will need a higher credit score to get the best interest rates on a home. A credit score of at least 720 will get you the best interest rates.