Eight Steps to Getting Your Finances in Order
March 24, 2006 Sometimes it seems like it will take forever to get the money together to buy a house. You might find the following helpful in establishing a plan. You'll get there sooner than you think!
- 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.
- 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 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 and 10 percent of your total income.
- 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.
- 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
- Save for a down payment. 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 down payment.
- Create a house fund. Don't just plan on saving what ever's left toward a down payment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.
- 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.
- 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.
© 2006 Susan Pruden
A lifetime Maryland resident, Susan Pruden has the ideal foundation for selling and buying homes. After 8 years working in just about every facet of the mortgage industry, and several years with her own company specializing in marketing for real estate agents, Susan got her real estate license in 1994. Susan has earned several industry awards. The CENTURY 21 Quality Service Pinnacle Award is based on reviews from Susan's clients and is earned by a very small percentage of agents. She has earned that coveted recognition since 2012
Two others were awarded by the Prince George's Association of REALTORS®. The Distinguished Sales Associate of the Year Award is based on a mixture of community involvement, association involvement and real estate education and designations. The other, the Distinguished Service Award, is for "exceptional meritorious service."
Susan is involved in her local community. She was named Cheverly Volunteer of the Year in 2018, even having June 25th designated "Susan Pruden Day" in the Town of Cheverly. She is also a Commissioner on the Prince George's County Historic Preservation Commission and President of the Cheverly American Legion Auxiliary.
Susan Pruden has lived in Cheverly lived with her husband, Joseph, for almost 30 years.
