How To Shape Up Your Finances
Take the time to put together a family budget.
Figure out what you spend over a 6 month period by looking at your
receipts and then establish a budget based on your figures. For most
people its easy to think of the mortgage or rent payment, car payment,
phone and electric, but the little items need to be considered such
as lunch at work, dry cleaning, etc. Write down
in a notepad every single dollar you spend in a months time. You'll
surprised, but also you will find ways to save.
Normally lenders look for
a total debt load of no more than 35-40 percent of your income. Since
your mortgage typically ranges between 25 percent and 28 percent of
income, you need to keep your other loans in the 8-10 percent range.
Make more money. Sounds simple, but sometimes you just
have to pull up the boot straps and get a second job or part-time job
to increase your income.This extra money may be enough to allow you
to qualify for your first home or your dream home.
Save. Save. Save. The more money you save for a
downpayment the better off you'll be in the long run. Now a days you
can get a 100% loan with no money down, but in some cases a small downpayment
might give you a better interest rate with a smaller mortgage payment.
Try to aim for a 20% downpayment.
Establish a downpayment fund. When you pay your bills
each month, consider the downpayment fund a monthly bill. Don't wait
to see what's left over. There's never anything left over. Pay into
your downpayment fund each month and before you know it you'll have
enough money to go forward in purchasing a home.
Most lending institutions like to see continuity in your
employment history. Try to establish at least two years in the same
job to show stability plus it may give you a chance at a better interest
This last tip should always be on your mind. Develop a
good credit history. Your credit rating makes all the difference when
applying for a big loan such as a car or home. Make your payments by
the due date and try not to carry a balance. A good credit rating will
save you a lot of money over the length of the loan.