Getting Ready to Buy a Home: 5 Best First Steps Series--Part 2

Real Estate Broker/Owner with The Master's Key Realty LLC -Windsor, CT - HARTFORD COUNTY REB.755648

Best Step 1 - Check Your Credit Now

You've got your eye on a new home and you've checked your credit. Perhaps you've had to "clean it up" a bit, but now your credit score has been raised and you're ready for the next step.

Best Step 2 - Diminish the Debt

Lenders limit the amount you can spend on housing to a percentage of your total income. What that percentage is depends on what type of loan program you're looking at, and that's a decision to be made when you consult with a trusted lender.  But if your total consumer debt exceeds 8% of your income, in nearly every case, the allowable housing payment will be reduced.

Diminish the DebtSo, now it is time to pay down those credit cards or pay off your auto loan if you can.

The best bet is to pay off the items with the highest rate of interest charged against them first, even if they are one of your larger balances. Sometimes the temptation is to pay off smaller balances, because it "feels better" to have a smaller number of payments going out.  But if you're really trying to maximize how far every dollar goes, then getting rid of the bills with the larger interest and fees is much more important.

Each time you pay off a particular balance in full, the next month re-allocate the money from that monthly payment and add it to the payment on your next highest interest bill. This one will pay itself off much faster, and before long, your debt load will shrink, and shrink, and shrink some more!

And, once you've diminished your debt, remember, this is not the time to open a new charge card or upgrade your transportation.  Even if you know your budget can handle it, these things are best done AFTER the closing on your new home.  You've worked hard to get this far...success and a new home are just around the corner!

If you have questions about a debt reduction plan, call me for a free list of resources. Getting your debt load as small as possible is another absolute Best First Step to a successful home purchase. 

Coming Soon:  More "Best First Steps" to Getting Ready to Buy a Home

Posted by


Serving the North Central Connecticut region, Hartford County, and the communities of Windsor, Bloomfield, Hartford, East Hartford, South Windsor, Manchester, Windsor Locks, Suffield, Enfield, East Windsor, Somers and the Granbys...

Opening Doors to Home Ownership . . . The Master's Key . . .

Residential Sales, Short Sales and Foreclosure Prevention, Multi-Family and Investment Properties, Condominium and Property Management

Lisa Orme on LINKED INRealtor logoThe Master's Key Realty fan page           LISA ORME        Lisa Orme on TWITTEREqual HousingRSS


Licensed in the State of Connecticut, ABR, CRS, GRI, PSCS, SFR, Notary Public, Lic. #REB.755648

 Broker/Owner of The Master's Key Realty LLC, 340 Broad Street, #320, Windsor, Connecticut 06095

To contact Lisa, call 860-688-1400 or send an e-mail to

Copyright, Lisa Orme, 2010.  All rights reserved.


This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Home Buying
Connecticut Hartford County
Rainmakers - In - Training
Almost Anything Goes
ActiveRain Rockstars
Power of Activerain
first time buyers
improve credit
debt reduction
pay off debt
getting ready to buy a home
preparing to buy
first steps to buying a home

Post a Comment
Spam prevention
Spam prevention
Show All Comments
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Lisa Debt-To-Income Ratios are very important in qualifying for a mortgage these days.  At one time most of the loan programs use to let you go to pretty high Debt-To-Income Ratios, but not any more they have been reduced substantially.

Jan 21, 2012 05:35 AM #1
Lisa Orme
The Master's Key Realty LLC -Windsor, CT - HARTFORD COUNTY - Windsor, CT
Broker/Realtor, ABR, CRS,GRI, PSCS, SFR, Notary Pu

George, I remember when I first started in real estate. It was part of the agent's job to figure the debt ratios and suggest strategies to improve the credit picture.  Now there are so many different programs and the guidelines change so often, I am happy to align myself with some excellent mortgage officers and let them do what they do best!

Jan 21, 2012 07:09 AM #2
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Lisa Orme

Broker/Realtor, ABR, CRS,GRI, PSCS, SFR, Notary Pu
Ask me a question
Spam prevention