Home Buying Advice - 8 Steps for Better Finances

8 Steps for Better Finances

Create a budget - Collect your receipts (credit card statements etc.) for the last 6 months and use them to create a budget. By using this method you should capture those expenses you would have otherwise missed, for example, medical, repairs etc. Once you know where your money is going, you can see what areas you can make cutbacks in and create a budget to guide future spending.

Reduce Dept - If your dept level is more than 36% of your income then you will need to reduce some of your dept's. Types of dept include, student loans, mortgages or other home loans, car payments, credit card balances etc. Debt repayment should form part of your budget.

Control Your Expenses - That old saying count the penny's and the dollars will follow can be true. Example, all those little expenses that you just ignore and see if you can cut back. For example, what about that cup of coffee you purchase every morning from the local coffee house.

Make more Money - If you cannot reduce your dept level then the other way of obtaining the mortgage you want is to increase your income. For example, you may have a take-on a part time job.

Save for a Down-payment - In order to obtain a good mortgage rate you will need to save for a down-payment. The basic rule is the more money you put down the better the rate. If you could put 20% down then that would the ideal situation.

Create a Slush Fund - When you move into your new home the chances are you will have some unforeseen expenses. For example, you may need new carpet or curtains etc. Put some money away each month to cover these potential costs.

Don't Change or Quit your Job - The loan officer will like to see that you have been in the same job for more than 2 years, if you haven't then you maybe charged an higher interest rate, or not even get a loan at all. This is especially true if you are self-employed.

Build-up a Good Credit History - Last and probably the most important is to ensure you maintain a good credit history. Pay your bills on time and do not max out your credit cards. If you don't have a credit card then it maybe worth getting one. No credt history is sometimes worse than bad credit history, owning and using a credit card (making payments) shows that you can control your level of dept and is a good way of building your credit history.

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