get your finances in order: to-do list
1. Develop a household budget. Instead of creating a budget of what you’d like to
spend, use receipts to create a budget that reflects your actual spending habits
over the last several months. This approach will factor in unexpected expenses,
such as car repairs, as well as predictable costs such as rent, utility bills, and
groceries.

2. Reduce your debt. Lenders generally look for a total debt load of no more than
36 percent of income. This figure includes your mortgage, which typically ranges
between 25 and 28 percent of your net household income. So you need to get
monthly payments on the rest of your installment debt — car loans, student loans,
and revolving balances on credit cards — down to between 8 and 10 percent of
your net monthly income.

3. Look for ways to save. You probably know how much you spend on rent and
utilities, but little expenses add up, too. Try writing down everything you spend for
one month. You’ll probably spot some great ways to save, whether it’s cutting out
that morning trip to Starbucks or eating dinner at home more often.

4. Increase your income. Now’s the time to ask for a raise! If that’s not an option,
you may want to consider taking on a second job to get your income at a level high
enough to qualify for the home you want.

5. Save for a down payment. Designate a certain amount of money each month
to put away in your savings account. Although it’s possible to get a mortgage with
only 5 percent down, or even less, you can usually get a better rate if you put down
a larger percentage of the total purchase. Aim for a 20 percent down payment.

6. Keep your job. While you don’t need to be in the same job forever to qualify for a
home loan, having a job for less than two years may mean you have to pay a
higher interest rate.

7. Establish a good credit history. Get a credit card and make payments by the
due date. Do the same for all your other bills, too. Pay off the entire balance
promptly.

If you have any questions or would like further information, simply contact one of
our
preferred lenders.


Reprinted from REALTOR® magazine with permission of the NATIONAL ASSOCIATION OF REALTORS®.
Copyright 2008. All rights reserved.
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