Eight Steps to Getting Your Finances in Order
1. Develop a family budget. Instead of budgeting what you'd like to spend,
use receipts to create a budget for what you actually spent over the last
six months. One advantage of this approach is that it factors in unexpected
expenses such as care repairs, illnesses, etc., as well as predictable costs
such as rent.
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 installment debt - car loans, student loans,
revolving balances on credit cards - down to a between 8 and 10 percent of
your total income.
3. Get a handle on expenses. You probably know how much you spend on rent
and utilities, but little expenses add up. Try writing down everything you
spend for one month. You'll probably see some great ways to save.
4. Increase you income. It may be necessary to take a second, part-time job
to get your income at a high enough level to qualify for the home you
want.
5. Save for a downpayment. 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 20 percent downpayment.
6. Create a house fund. Don't just plan on saving whatever's left toward a
downpayment. Instead, decide on a certain amount a month 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.
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.
This free report is provided to you by Lynnette Wallace, Your Hat Lady in
Real Estate and Help U Buy Realty. For more information, please call
817-454-3641 or e-mail HatLady@HatLadyRealEstate.com.
