Home Buying Secrets
Dec.17, 2010 in
Home Buying
Home buyers need a good strategy if they plan to buy a house, save for a mortgage, and not have to live only paycheck to paycheck. If your goal is to buy a home, whether your first or your tenth, then that needs to be your financial priority.
Most people need to sacrifice a little and stick to a budget in order to save for a home. A good budget plan begins one or two years before the buyer even makes an offer.
- Get your credit built up! When it comes to securing a loan at the best mortgage rate, credit is king. A low score can prevent someone from buying a home or at least from qualifying for an affordable mortgage rate. Some people who think they have good credit don’t, while people who think their credit is bad may be surprised that it is actually okay. Improve your credit score by making sure all your bills are paid on time. Check with the credit agencies and fix any errors in your credit report.
- Save, save, and save again. Make “virtual” mortgage payments today as a way to build up savings and learn to budget for actual mortgage payments down the road. Renters can estimate a mortgage payment and set aside the difference between that payment and their rent each month. If you are paying $800 in rent and estimate your mortgage will be $1,100, you can put $300 per month in a special savings account.
- Get that debt down. While buyers increase their savings, they should also reduce their debt. Paying off debt should top saving in terms of priorities because of the interest payments on the debt, which exceeds the amount of interest they can earn on their savings. Some companies will relax their standards for borrowers with a strong credit score or substantial cash reserves, but in general, FHA will only go up to 43 percent and conventional lenders will only go to 41 percent for the overall debt-to-income ratio.
Related posts:
