Setting A Budget

The budget you would like to have and the budget you should have are two different things. Use receipts of past purchases to inform your budget. This will help you understand how much money you actually have to spend on housing. Tracking expenses will also give you insight about possible savings.

Debt Reduction

Debt to income ratio or DTI is something that lenders look at very closely when deciding if you are a good candidate for a mortgage loan. Most loan programs and lenders look for a ratio of no more than 36 percent of household income. However, this figure includes your mortgage which will be anywhere from 25 to 28 percent of your net household income.

Income Increase

Whether you take out a second job or finally ask for a raise, now is the time to make the move toward and income increase. With more income coming in, you have a better shot of qualifying for the home you really want.

Saving For The Downpayment

Now is the time to save towards that down payment. Put aside money each month so that when you find your dream home you are ready to pounce. Although it is possible to get a mortgage that requires as little as 3% down, you can get a better rate if you put more money towards the downpayment. Additionally, putting 20 percent towards your home will ensure that you are not required to pay a monthly Private Mortgage Insurance (PMI) premium.

Focus On Credit

Credit scores are used by lenders when they are considering whether to approve your loan application. Building your credit can be as easy as getting a credit card and making payments before the due date. Make sure that you do the same for all of your other bills as well. In addition to building good credit, you should also fix any current credit errors you may have. Obtain a credit report and make sure that it is accurate. If any inaccuracies exist, now is the time to fix them.


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