The idea of purchasing a house can become a reality, but you need to take certain steps in order to make it happen. Looking at your bills and debt could seem discouraging if looked at in their entirety, but broken down into simple lifestyle changes will help you get your finances in order.
1. Create A Budget. The dreaded B word is enough to make some people go into cardiac arrest. If you are one of these people, start off by just taking inventory of your daily spending. Keep all of your receipts for a month. At the end of every week, add up the receipts and average out your weekly expenses for a month and include your bills. Look at where your money is going, and then create a realistic budget for yourself based off your expenses. This method will take into account your daily and impulsive buys, as well as your rent, gas, car payments, and groceries.
2. Reduce Your Debt and Build Up Your Credit. The first thing that lenders look at is your credit report. If you don’t have perfect credit, don’t panic. Focus on making payments to bring your debt ratio down and do not open any new lines of credit until after you get your house.
3.Save, Save, Save. Yes, saving is easier said than done. Be aware of every time you spend money. The little expenses really start to add up. Your daily Starbucks coffee or buying your lunch at the café across the street from your office can really make a dent in your bank account. Look for little ways to save, like making your coffee or making your lunch. When you really start taking note of where your money is going, you might see easy ways to save yourself some major cash.
4. Try and Increase Your Income. Maybe you are due for a raise, it can’t hurt to ask! If a raise is out of the question, consider taking on a second job. In order for your second job to make a difference with your lender however, it needs to be on the books.
5. Save For A Down Payment. Every month, no excuses, start putting a set amount of money into your savings account. You can purchase a house with as little as 5% down payment or even less depending on your specific loan program, but generally you get a better rate if you have a larger down payment.
6.Don’t Change Your Job. Lenders look at your employment history, so jumping from one job to the next is going to go against you, especially periods of unemployment. If you are thinking of making a career change, wait until after you purchase your home.