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1. Develop a family budget. Instead of budgeting what
you’d like to spend, use receipts to create a budget for
what you actually spent over the last six months. One
advantage of this approach is that it factors in unexpected
expenses, such as car repairs, illnesses, etc., as well as
predictable costs such as rent.
2. Reduce your debt. Generally speaking, lenders
look for a total debt load of no more than 36 percent of
income. Since this figure includes your mortgage, which
typically ranges between 25 percent and 28 percent of
income, you need to get the rest of installment debt—car
loans, student loans, revolving balances on credit
cards—down to between 8 percent and 10 percent of your total
income.
3. Get a handle on expenses. You probably know how
much you spend on rent and utilities, but little expenses
add up. Try writing down everything you spend for one month.
You’ll probably see some great ways to save.
4. Increase your income. It may be necessary to
take on a second, part-time job to get your income at a
high-enough level to qualify for the home you want.
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5. Save for a downpayment. Although it’s possible
to get a mortgage with only 5 percent down—or even less in
some cases—you can usually get a better rate and a lower
overall cost if you put down more. Shoot for saving a 20
percent downpayment.
6. Create a house fund. Don’t just plan on saving
whatever’s left toward a downpayment. Instead decide on a
certain amount a month you want to save, then put it away as
you pay your monthly bills.
7. Keep your job. While you don’t need to be in
the same job forever to qualify, having a job for less than
two years may mean you have to pay a higher interest rate.
8. Establish a good credit history. Get a credit
card and make payments by the due date. Do the same for all
your other bills. Pay off the entire balance promptly. |
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