Buying a House: Get Your Finances in Order

| Posted: 20-05-2008 | Comments: 0 | Views: 6 | Rating: (50)

(?)

When you want to buy a house, the most important step is to get your finances in order.

This should be done before anything else, as it will provide you with a general idea of what you can afford for a down payment and most importantly, it will give you a better sense of how much home you can afford. There are a few steps that you can take to make sure that you fully understand your financial situation and to make repairs in areas that need it.

First and foremost, a budget needs to be set. Many people create budgets and end up not following them because they are not realistic.

To prepare a realistic budget, gather receipts for six months and then total them up to see where you are spending money. It is easy to budget for things such as rent and car payments but there are always unexpected items, such as car repairs or illnesses that have bills attached to them and it is essential that these items be included for a realistic financial picture.

Along with creating a budget, make sure you know exactly what you are spending money on. By looking over expenses for one month, there are probably many items that don't need to be purchased. Lottery tickets, daily cups of coffee, and other small items can really add up quickly and can be a great money saver if they are eliminated from the expenses.

And of course, you need to get rid of as much debt as possible. Most lenders will be more open to give a loan to people who have debt less than 36 percent of their total income. The mortgage will be included in this figure and the mortgage alone will generally be 26 to 28 percent. This only leaves 10 percent for other loans such as car loans, outstanding credit card debt, and any other type of debt.

Of course, the only way you can reduce debt is to pay it off. To do this, you may need some extra income. A second part-time job may be necessary to do this. Even if you don't have that much debt, extra income will come in handy when it comes time to make a down payment.

Usually lenders will only ask for a 5 percent down payment. However, the more you put down, the less the mortgage payments will be and you may end up with a lower interest rate. Aiming for a 20 percent down payment will generally serve you best in the end.

Make a house fund part of your monthly expenses. Sometimes putting away whatever you have left at the end of the month will often be an amount of zero. Decide on a number and stick to it.

It's also important that you have the same job for at least two years before applying for a mortgage. Any time less than two years is viewed as high risk by lending companies and you may end up with higher monthly payments or interest rates.

And lastly, make sure you have good credit history. Eliminate bad history by paying off debt and if you have no credit, get a credit card and make the payments on time. This will help when lending companies are considering giving you a loan.

Rate this Article:

Current: 0 / 5 stars - 0 vote(s).

Article Tags: Mortgage, Home, Finances, Credit, House, Housing

Article Source: http://www.articlesbase.com/real-estate-articles/buying-a-house-get-your-finances-in-order-420793.html

Print article

Send to friend

Publish this Article

Author feedback

About the Author:

Paige Martin is award winning Houston realtor. Her website features 500+ pages of data and lists all Houston Condos for sale and Houston Townhomes For Sale. Paige is a member of the Houston, Texas, and National Assoc of Realtors. Paige Martin, Martha Turner Properties.

Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free!

Article Comments

Add new Comment

Top 10 Tips for a Healthier Home
By: The House Team Of Mortgage Intellingence | 21/11/2006 | Wellness

Homeowners Foresee Long-term Mortgage Commitment
By: Tml-mortgages | 30/10/2006 | Mortgage

Refinancing Your Mortgage Or A Home Equity Loan - Which Is Better?
By: Joseph Kenny | 25/10/2007 | Finance
Free Finance articles for use on your Finance related website. Find articles of the subject of Finance

How A Home Equity Line Of Credit Can Fulfill Your Dreams
By: Joseph Kenny | 28/10/2007 | Finance
Free Finance articles for use on your Finance related website. Find articles of the subject of Finance

American Realtors Target Canadian Home Buyers
By: Kyle Ware | 25/10/2007 | Real Estate

Using A Home Equity Line Of Credit To Repay Credit Card Debt
By: Joseph Kenny | 17/08/2006 | Advice

Fast-tracking to Mortgage-free
By: The House Team Of Mortgage Intellingence | 21/11/2006 | Mortgage

5 Tips to Help you Get Ready for Home Ownership
By: The House Team Of Mortgage Intellingence | 21/11/2006 | Real Estate

Got a Question? Ask.

Ask the community a question about this article:

Q&A Powered by:

Latest Real Estate Articles

Small is Beautiful
By: Carol Freyer | 06/10/2008
One major bonus of Shafer's homes is the low cost of heating. Heated with propane, his own home—a smaller model—costs him $170 per year to heat, and that's in Iowa, where winters are winters. Plus, a smaller home requires less maintenance. Everything is smaller and therefore the amount of work to be done is less: less to dust, less to vacuum.

Realty Remodeling Rules
By: Carol Freyer | 06/10/2008
If you are living in a lower price area and put in a swimming pool and an outdoor kitchen before you list your house, it will most certainly bring the buyers to your home. It will no doubt bring in offers for your home and all this is good news.

Get Your Heating Bill Down
By: Carol Freyer | 06/10/2008
Some statistics say that as much as 80% of the hot air can be lost up the chimney. If that is added to the amount of cold air that is pulled from the atmosphere, then the old log fireplace could almost be said to be mainly a visual experience.

Astrology, Feng Shui, Magic Spells... and Selling Homes
By: Carol Freyer | 06/10/2008
Astrology has been used to divine the future since before the Common Era. Many people today view it as a harmless amusement. Move.com even has a section for "homestrology" profiles. Realty Times did an article entitled, "Look to the Stars for Decorating Advice", featuring astrologer John Marchesella, who claims that knowing your Sun Sign can help you choose colors for your home.

Americans Want Green Homes!
By: Carol Freyer | 06/10/2008
Heating takes a large chunk of our money during the winter months; have you thought of installing a wood stove with an outside chimney (the easiest to install)? The new stoves that leave almost no residual wood and are almost 'smokeless' are part of a grant scheme offered by some governments.

Real Estate in the Top 4 Louisiana Public School Districts
By: Andrew Stratton | 06/10/2008
Louisiana Public School Districts are great areas to live as they offer excellent school system, security, and lot of enjoyable activities. A realtor can help buyers make a good deal.

The R.E.I. Revolution On The Internet
By: Damian Lanfranchi | 06/10/2008
Understand it and thrive. Ignore it, get left behind. I want to make sure that you truly grasp how the internet is revolutionizing the Real Estate investing world. It's absolutely critical to the success of your business. It's something that a lot of the Real Estate investors and gurus are missing the boat on when it comes to their real estate investing website.

Cyprus Property is Hot! But is it Getting Too Crowded?
By: Steven Clarke | 06/10/2008
The recent interest in Cyprus property has initiated a housing boom on the island. It doesn't matter where you go on the island, you can often hear the sound of construction in the background. Developers are scooping up land at an alarming rate trying to keep pace with the growing...

More from Paige Martin

Buying a Home: 10 Tips To Get Ready For Owning a Home
By: Paige Martin | 24/05/2008 | Finance
Following are 10 easy steps to prepare for home ownership. Great advice for first time home buyers!

Houston Homes Continue To Show Strength Despite National Housing Crunch
By: Paige Martin | 24/05/2008 | Real Estate
Houston neighborhoods depart from national trends by showing continued appreciation

Advice for First-Time Homebuyers
By: Paige Martin | 21/05/2008 | Real Estate
It's important for first time homebuyers to be better prepared than ever with the current fluctuations in the real estate market. Following are some of the most important tips for new buyers

Buying a Pre or Post Foreclosure Property?
By: Paige Martin | 06/05/2008 | Real Estate
Buying a home out of foreclosure can be a great investment now. Tips to make a good buy.

How to Make a Smart Real Estate Offer
By: Paige Martin | 13/03/2008 | Real Estate
Even in a down market, it's important to make a good real estate offer. Real estate negotiation tips and advice.

Life Expectancy of Home Items - Get More From Your Home
By: Paige Martin | 11/03/2008 | Home Improvement
Get more from your home, learn how best to maintain your home items and save money.

Moving and Packing Tips To Make Your Life Easier
By: Paige Martin | 09/03/2008 | Real Estate
No one likes to pack, but following these tips can make your life a lot easier!

Knowing Buyers Brings Better Negotiation
By: Paige Martin | 07/03/2008 | Real Estate
In a slow real estate buyer's market, it's important to know the different types of real estate buyers in today's market.

Article Categories

Article Marketing

Article Notepad

Stop Duplicate Content

Term Papers

Need Help?

Sign up for our email newsletter

Receive updates, enter your email below

Use of this web site constitutes acceptance of the Terms Of Use and Privacy Policy | User published content is licensed under a Creative Commons License.
Copyright © 2005-2008 Free Articles by ArticlesBase.com, All rights reserved. (0.39, 17)

Buying a House: Get Your Finances in Order

Article Comments

Related Articles

Got a Question? Ask.

Latest Real Estate Articles

More from Paige Martin

Need Help?

Site Links

Webmasters

Business Info

Sign up for our email newsletter