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Become a homeowner by following these 7 habits.
Creating a budget will discipline you to manage your money and control your spending. When you are ready to buy a home, you will have a clear picture of where your money is being spent. In your budget include expenses such as housing, transportation, food, debt, childcare, entertainment and any other expenses you may have. Don't forget to include 'down payment' savings as an item! To create a budget for free, try mint or any other free budgeting online apps.
As part of achieving your goal of becoming a homeowner, you have to make sure you are debt free, so you'll have a better chance of being approved for a loan. Some experts recommend you start paying your smallest debt first, than focus on the larger debts.
If you haven't heard this before, the higher your credit score, the better the interest rate you will get. It's true! You will end up paying more if you have a low credit score. One way to stay on top of your credit score is to monitor your credit report, and if you have a low score, follow these hacks to help you improve your credit.
Part of creating a budget is to also allow you to save for a down payment so when it's time to buy, you are in a great position to pay for the down payment. Some mortgages are being offered at a low down payment of 3%, so make sure you talk to a mortgage professional as you get closer to applying for a home loan to see which mortgage best fits your needs.
Aside from planning to save for a down payment, you should also put some money aside for an emergency. Some creative ways to build an emergency fund is to work as a freelancer to generate extra cash. Keep a savings account separate from your other accounts so that you are not tempted to use the money.
Once you have a clear picture of your finances, you can now go find out how much you can afford. By knowing the cost of your mortgage, you will be able to plan better for all the costs of being a homeowner. You can use a home affordability calculator to give you an idea of how much you can afford and what your monthly payment will be.
Lenders want to lend money to people who have a steady income because it gives the lenders confidence you are able to repay the loan. Some lenders require two years of employment; those who are self-employed must show documentation of their earnings. Lenders will typically check for your income via tax returns.
Creating great habits to help you buy a home will prepare you to get a mortgage loan to buy the home you need. Creating a budget and following the plan will take time, but with constancy and discipline you will get there. The time it takes you to develop the 7 habits to help you buy a home will be entirely up to you.
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