Clear the Path to Homeownership: Tips to Achieve Your American Dream
Saturday, September 13, 2014, 1:00 AM | Leave Comment
Owning a home has always been the American dream. It’s part of starting your own life and living out your own life, but it can be expensive. Keep these four tips in mind as you prepare to buy your first home.
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Cash – Consistently Earn and Save It
Don’t overlook the importance of having cash in your pocket. No matter what home you choose, you will need a down payment.
Depending on the lender, that down payment may need to be as much as 20-30% of the value of the home.
Lenders prefer a stable work history, so earning a salary at the same job for two years or more improves your chances of getting a loan.
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Credit – Study Your Record
Besides cash flow and savings, lenders are especially interested in your credit history. All of the major credit reporting companies (TransUnion, Equifax, and Experian) are required by federal law to provide you a free credit report each year.
Request one from each and study them closely. Are there opened credit cards that you never use? Close them when you can, because too much credit is not always beneficial.
Or the other alternative, do you have enough credit to establish a history?
To help you achieve the right balance, request a meeting with a financial representative from your bank or if available, elicit the help of a trusted family member or friend who is a financial consultant.
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Loan Alternatives – Do Your Homework and Solicit Help If Necessary
The reality is, you have to shop around for the best mortgage for your financial situation. The terms are important; fixed rate, variable rate, 15 year, and 30 year loans are just a few you will need to consider.
Also, there are mortgage providers everywhere including local banks, credit unions, and even sources you may not consider such as the government which offers USDA home loans or USDA Loans Direct for special circumstances.
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Don’t End up House Poor
Before looking at homes, develop a monthly budget and decide what your ideal monthly mortgage payment should be.
If you like to travel, frequently eat out, and go to concerts, movies, or shows, allocate money for these activities.
The mortgage payment should be something that you can comfortably make when factoring all of your other expenses and interests.
The worst thing that can happen is becoming house poor, which means your budget is mainly allocated to home-related expenses.
By using these tips, you can effectively and successfully plan for the purchase of your first home. In no time you’ll be living out your own American dream.
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