Plan for owning a home today. Photo Credit: Missouri Development
If only making the switch from renting an apartment to owning a home could be achieved with a simple step-by-step plan. Even though the process is more complicated than that, being well-informed can help you reach your homeownership dreams faster. Here are some great websites and must-do items to check out while planning for the big leap.
It’s hard not to chomp at the bit with so many great houses on the market at low prices. But to find out if you can really afford the monthly payments, check out this cool Mortgage Calculator to help you understand what your financial responsibilities will be. The tool factors in the type of mortgage you choose.
You can also use the site’s interest rate finder to plug in specific info about a house that meets your desired price criteria. This useful exercise can be a real eye-opener in terms of what you’re currently paying on rent, all of which could be going toward a real estate asset.
Assessing your creditworthiness is probably the most important step in the planning process. To get the best mortgage rates, you should be working now to put yourself in a position of negotiating power. Check out SuzeOrman.com for a FICO kit to check for errors and improve your score. This also helps you understand your debt-to-income ratio, a crucial figure in how lenders view you. Suze has a ton of other easy-to-follow guides in getting yourself financially ready for homeownership.
Obviously, the bigger your down payment, the less impact homeownership will have on your monthly expenses. And the higher your monthly expenses, the less house you can afford. There’s no way you can save an adequate amount of money for a down payment if you’re throwing it away on high-interest credit cards and overspending each month. Make a promise to yourself this year to realistically review your budget. Only with an honest picture of your current finances can you truly know if you can afford to move on up. I made a few stabs at creating a budget before, but only until I visited a financial planner did I get the scary but motivating truth. He or she will tell you how to get from here… to there. A good place to start your search is CFP.net.
If home ownership is your dream, then start the New Year off right by getting in fiscal shape for it. Like any workout plan, start small and build on up.
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