Tips to Preparing to Buy A Home

Are you itching to buy that new home and take advantage of the great low interest rates? 

Here are a few tips to help you on the road to getting your credit ready to take on the biggest purchase in your life time. 

1. Assess your debt.

No debt is not always good for your credit score. Lenders are looking for history; are you on time with your payments, can you make the minimum required a month 

each month and how long have you had the credit. There’s good debt, and there’s bad debt. The good kind is debt that will produce a return in the future—or, at the very least, it’s tax deductible. Credit card debt is always bad debt. Pay it off first, but don't close the credit cards out. 

2. Set a monthly financial goals and save smart.

Figure out how much you can afford every month to keep yourself financial stable. If you need to cut out those daily Moca's or Redbulls to buy your new home, then its time to weed them out of your daily expenditures. And save, save, save, save! As you learn to live with less, gradually increase the amount going into savings or toward paying off debt.

4. Look ahead. 

If you're looking forward to a new job promotion, that's great! It will generate new income for you. If you're thinking of changing jobs, make sure it's an increase in income rather then a decrease. You could knock yourself out of the running for a bigger home to fit your families needs. If you've been thinking your own business venture as a entrepreneur, consult with a lender first. Most financial lenders require 2 years of tax returns in your new business, you may wind up having to wait 2 years before you can buy a home. 

5. Prepare for the worst. 

Always prepare for the unexpected. You never know what's lying around the corner. If a family emergency comes up, will you be able to pay your mortgage? Put together a plan for the "what-if" scenarios. You don't want to be caught not being able to pay your mortgage and facing a possible foreclosure. 

6. Develop good habits.

Develop a good habit of saving. Try to remember to "pay yourself first". Even if its $100 a paycheck, at least that's something. You'll get in the habit of paying yourself a $100 and before you know it, that $100 could turn into $1000. Create good habits that you will live with for years to come. 

Source: 6 Tips to Reduce Your Debt