Ways to Save. Your Own Personal Financial To-Do List

We’re often asked about the best way to ​prepare ​to buy a home. And there are several ways to do it. You can follow some of these tips or ask your financial advisor or lender to assist you. In the meantime, here are some that we would like to share to help you get started in the process of home buying.

1. Develop your household budget. Instead of creating a budget of what you’d
like to spend, use receipts to create a budget that reflects your actual spending habits over the last several months. This approach will factor in unexpected expenses, such as car repairs, as well as predictable costs such as rent, utility bills and groceries.

2. Reduce your debt. Lenders generally look for a total debt load of no more
than 36 percent of income. This figure includes your mortgage, which typically
ranges between 25 and 28 percent of your net household income. So you need to
get monthly payments and the rest of your installment debt — car loans, student
loans, and revolving balances on credit cards — down to between 8% and 10%
of your net monthly income.

3. Look for ways to save. You probably know how much you spend on rent and
utilities, but little expenses can add up, too. Try writing down everything you
spend for one month. You’ll probably spot some great ways to save, whether it’s
cutting out that morning trip to Starbucks or eating dinner at home more often.

4. Increase your income. Now’s the time to ask for a raise! If that’s not an
option, you may want to consider taking on a second job to get your income at a
level high enough to qualify for the home you want.

5. Save for a down payment. Designate a certain amount of money each month
to put away in your savings account. Although it is possible to get a mortgage
with no or very little money down, you can usually get a better rate if you
put down a larger percentage of the total purchase. Aiming for a 10 percent to 20 percent down payment is a great place to start. This may also eliminate private mortgage insurance, also known as PMI.

6. Keep your job. While you don’t need to be in the same job forever to qualify
for a home loan, having a job for less than two years may mean you have to pay a
higher interest rate.

7. Establish a good credit history. Get a credit card and make payments by the
due date. Do the same for all your other bills, too. Pay off the entire balance
Promptly. Don’t just make the minimum payment.

​Source:http://www.realtor.org/rmosales_and_marketing/handoutsforcustomers/handouts/Buyer11