Are you dreaming of owning your own home? With careful planning and attention to finances, most people can be homeowners. But, when you start looking at homes one of two things can happen. First of all, you find a home, get financing and buy it but then find out that you are so strapped for payments that life is a chore and you are on always on the edge of going into default on your mortgage. Or second, you fall in love with a property that is far beyond your means, get turned down for financing, get depressed, and give up. If you really want to be a homeowner neither of these scenarios needs to happen. The first step is to start your home ownership with a house you can afford.
First Financial Steps
When you get a mortgage to help you buy a home it often becomes your largest monthly expense. In fact, if you lose your job or have unexpected expenses you can be in danger of going into default on your payments and even losing your home. The first financial steps on the way to owning a home help you avoid that disaster.
Pay Off Your Credit Cards
It is way too easy in modern society to pay with a credit card and then just make the minimum payments when the bill comes every month. Aside from the fact that you now own a credit card company a lot of money you are also paying a really high rate of interest on that borrowed money. The first step toward home ownership is to pay off your credit cards and if you need help with that consider a debt consolidation service.
Rainy Day Fund
The next step is to start putting money in the bank to have in case of unexpected expenses or job loss. Most experts suggest six months of expenses should be protected with this sort of nest egg.
Down Payment Fund
You will be able to afford your home better if you put down a down payment on your home loan. Interest rates will be better and you will get better terms.
Now Let’s Talk About Buying A House
When you have put your financial house in order it is time to get pre-approved for a loan to buy a home. Visit more than one lender and compare the terms they offer. You should get better terms if you put 10% or even 20% down on your loan. If you are a military veteran ask your real estate agent about who handles VA secured loans.
The point of this discussion is to start your home ownership with a house that you can afford. With your loan pre-approval in hand look at homes that you can easily pay off in 15 years. The point then is to rapidly increase your equity in your new home as you make payments. Then, when you are ready to move up to a nicer home you will have more for the down payment and will continue to make manageable payments on your mortgage.