-
Develop
a family budget. Instead of budgeting what you’d
like to spend, use receipts to create a budget for
what you actually spent over the last six months.
One advantage of this approach is that it factors in
unexpected expenses such as car repairs, illnesses,
etc., as well as predictable costs such as rent.
-
Reduce
your debt. Generally speaking, lenders look for a
total debt load of no more than 36 percent of
income. Since this figure includes your mortgage,
which typically ranges between 25 and 28 percent of
income, you need to get the rest of your installment
debt—car loans, student loans, revolving balances on
credit cards—down to between 8 and 10 percent of
your total income.
-
Get a
handle on expenses. You probably know how much you
spend on rent and utilities, but little expenses add
up. Try writing down
everything
you spend for one month. You’ll probably see some
great ways to save.
-
Increase
your income. It may be necessary to take on a
second, part-time job to get your income at a high
enough level to qualify for the home you want.
-
Save for
a down payment. Although it’s possible to get a
mortgage with only 5 percent down—or even less in
some cases—you can usually get a better rate and a
lower overall cost if you put down more. Shoot for
saving a 20 percent down payment.
-
Create a
house fund. Don’t just plan on saving whatever’s
left toward a down payment. Instead decide on a
certain amount a month you want to save, then put it
away as you pay your monthly bills.
-
Keep
your job. While you don’t need to be in the same job
forever to qualify, having a job for less than two
years may mean you have to pay a higher interest
rate.
-
Establish a good credit history. Get a credit card
and make payments by the due date. Do the same for
all your other bills. Pay off the entire balance
promptly.
