One of the greatest financial investments you can ever make is owning a home. To make it a reality, you have to know how to manage your finances, because it affects your purchasing power and your credit score. Here are tips to help you manage your money during this crucial period
Obtain a Mortgage
Commercial banks, mortgage brokers, mortgage companies and credit unions offer mortgages. Since you are borrowing money, the lender will check your credit history to decide if you can pay your debts before they consider advancing you the loan.
The lender will check various ratios and your repayment history. Most institutions require a minimum down payment of 20% of the price of the home. A mortgage allows you to have some money at hand.
Saving to Buy the Home
You can start saving money by opening a new savings account at a bank that earns a reasonable interest. You will then be able to save part of your every income. This can be s low as five percent.
If you get large sums of money from any source, deposit into this account and forget that you ever received such money. When you have spare change, empty your pockets into a box, container or coffee jar.
You have to sacrifice many things. For instance, put a limit on your entertainment. You may also need to avoid expensive restaurants and when shopping, avoid impulse buying. Buy only what you need and use cheaper appliances but of good quality.
Establish and Fix Your Credit
It is better to have bad credit than no credit at all. Therefore, get a credit card from any of the banks. Start with your own local bank because usually they will not ask you why you need it. This is to prove to your lenders that you can pay your debts. Use it to pay your bills, always pay on time, and while you use it, control your spending. In addition, never use it to get a cash advance.
You need to get a copy of your credit report. If it has errors, check it with your creditor. You also need to lower your debts by paying them off on time.
Planning to Buy the Home
According to the article planning to buy a home, you need to consider all your expenditures other than the mortgage because your life has to go on. Make sure you have some savings to turn to.
You need to keep track of your credit card so that you don’t spend more than you can afford.
You have to be very specific in tracking your income and expenses so that you can know exactly what is draining your finances then seal the loophole. You can do this by writing them down on paper. Through this, you make better choices.
When you do all these, the dream of buying your home can become a reality.
Categories: Real Estate