Dreams Are Just Goals With A Deadline!

The dream of buying a home can be a reality for anyone. Owning a home is a one-of-a-kind feeling. Homeownership is part of the American Dream and is a very achievable dream! The trick is coming up with effective goals you can realistically accomplish. Buying a house means you will most likely have to qualify for a mortgage which means you will need an adequate credit score, a down payment, and enough income that leaves enough for the house payment!

CREDIT SCORE

The mortgage interest rate depends on your credit score as well as the type of mortgage and the length of time. Your first step is to obtain your credit report and score! Review the report for any errors. The credit bureaus can be slow to make changes. If you do find errors, your lender can request an expedited re-scoring that takes place in about 72 hours. A minum score of 500 to 520 is required. A higher score will help you secure a lower interest rate.

Goal One: Raise your credit score  –  Raising a score by one hundred points in six months is achievable. Talk to your lender for ways to achieve this goal.

PAY DOWN DEBT

Not only will your credit score be considered, but also your debt to income ratio. Have you been using credit cards but not paying them off in full each month? Tighten your belt and get rid of as much debt as you can. But do not close the accounts. One factor in your credit score is your used debt compared to available debt. If you close an account, you'll decrease you available debt total.

Goal Two: Pay down debt  –  This goal completely depends on you. How willing you are, how much debt you have, and how much money you need for a down payment will determine your goal for how much debt you pay off and how much time that will take you.

SAVE FOR DOWN PAYMENT

Expect to pay a 20% down payment. If your credit score is at the border of going from mediocre to good, a larger down payment might persuade the lender to not only approve the loan, but give you a lower interest rate. Lenders also look at your total assests. If you have stuff you never use, sell it!

Goal Three: Save for that down payment – Set a goal for your down payment. Divide that by the number of monts you have before you go house hunting and work to save that amount each month.

INCREASE GROSS INCOME

How much you can afford will depend on how much you can pay every month. Most lenders prefer you to keep that figure at no more than 28% of your gross income. For example, if you household income is $4,000 a month before taxes, then your ideal maximum house payment will be $1,120. If you make $6,000, you can afford a house payment of up to $1,680.

Goal Four: Increase your monthly income – This goal can be tricky, especially if you are already living within your basic needs. Consider looking for a new job with higher pay, but do so 6 – 12 months before you apply for a mortgage! Request a raise at your current job, work some overtime, if you are part time at your job consider working full time or, if that is not an option in your current position, perhaps look for a second job.

Make the dream of owning your own home a reality!