[pre-] First Things First: 8 Steps to Getting Your Finances in Order

By
Real Estate Agent with Keller Williams Realty Diamond Partners, Inc.

This actually comes before my previous blog: First Things First: Pre-approval to Purchase a Home.  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 car 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 percent 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 between 8 percent 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 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.

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.

Now, read First Things First: Pre-approval to Purchase a Home

I will be happy to send you a 46-page, complimentary Buyer's Handbook [for free] I know, complimentary = free (retail: $21)  to become more familiar with the complete home buying process so you will be ready to go when you begin achieving the above steps.  Simply leave your e-mail address in your response, or send me a private email: mhecker@kw.com   Thanks!

Congratulations!

Your information and e-mail address will be kept strictly confidential and will not be shared or distributed.

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Location:
Kansas Johnson County
Tags:
home
buyer
preapproval
finances

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
104,204
Rosario Lewis
DDR Realty - Newburgh, NY
GRI, SRES - DDR Realty - Orange County, NY

I was floored when a couple of recent clients decided to buy new cars while prepping for home financing. 

Mar 10, 2008 03:19 AM #1
Rainer
5,304
Matt Hecker
Keller Williams Realty Diamond Partners, Inc. - Olathe, KS
Oh, I know Rosario.  [And I'm sure you do, but] whenever I first make contact with a prospective buyer, I brief on the pre-qual. process, and urge them, "NOT TO MAKE ANY BIG EXPENDITURES!"  Hhhmmm... a new house that we can get for a GREAT DEAL right now, or a car, who's price will remain relatively fixed... Silly  Makes you wonder sometimes.  That actually is a great lead-in to today's entry.  Thanks a lot!  -MH
Mar 11, 2008 07:32 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?

Rainer
5,304

Matt Hecker

Ask me a question
*
*
*
*
Spam prevention

Additional Information