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Home Financing Tips for Purchasing Your New HomeHome financing and budgeting is one of the most important aspects of the home buying process. Explore these 8 steps to help you get your finances in order. They will help you set your home buying plan in motion!
1. DEVELOP A FAMILY BUDGET. Instead of trying to budget what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses such as car repairs, illnesses, etc., as well as predictable costs such as rent. For more great home financing, budgeting and money management tips visit Dave Ramsey. 2. REDUCE YOUR DEBT. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Since this figure includes your mortgage, which typically ranges between 25 and 28 percent of income, you need to get the rest of your installment debt—car loans, student loans, revolving balances on credit cards—down to between 8 and 10 percent of your total income. For more information on credit card management visit Better Manage Money. 3. GET A HANDLE ON EXPENSES. You probably know how much you spend on rent and utilities, but little expenses add up too. Try writing down everything you spend for one month. You'll probably see some great ways to save. For more information visit A Debt Free Life. 4. INCREASE YOUR INCOME. It may be necessary to take on a second, part-time job to get your income at a high enough level to qualify for the home you want. Use your specific hobbies or talents to help generate income! 5. SAVE FOR A DOWN PAYMENT. Although it's possible to get a mortgage with only 5 percent down—or even less in some cases—you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 5 percent down payment, if not, do your very best! 6. CREATE A HOUSE FUND. Don't just plan on saving whatever is left toward a down payment. Home financing and budgeting will help you to decide on a certain amount each month that you want to save, then put it away as you pay your monthly bills. 7. KEEP YOUR JOB. While you don't need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate. A lot of home mortgage lenders require that you have a steady 2 year work history (even if it's not the same job). You need to show 2 or more years of steady work history. 8. ESTABLISH A GOOD CREDIT HISTORY. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly and we can't emphasize this enough...PAY ON TIME! Check your local bank for secured or unsecured credit cards. Choose a card that has a low interest rate. If you've never had a credit card and need to establish credit consider a local, legit secured card from your bank only. If you're new to the credit world, don't deal with on-line credit cards and offers. Go directly to your personal bank to ask questions and then apply in person! For more information visit Your Credit Score...the Good, Bad and Ugly!
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