Getting Your Finances Ready to Buy A Home

You have reached a time in your life where you are ready to make a big purchase, you are ready to buy a house. The first thought of this may send your mind racing in many different directions. Don’t worry, you must know people who have bought homes and there will be many people that buy homes after you. The one thing you have in common with all of these people is you need to get your finances in order. Most of these people just like you will need to get a loan from your bank. Here are some steps you should take to getting your finances in order to buy a home. When you are done with these steps you should be ready financially to buy a home.

Gather Information about Your Current Finances

The first step is for you to find out where your current finances stand. If you are going to try and save money you will need to know where your money is going and how it’s being spent. Write down everything that your money goes to: Things such as rent, utility bills, cable bills, credit card bills, car payments and any other monthly expenditures. You also need to think about those expenditures that may not be monthly but you know you will still make, things such as going to the grocery store or gas for your car. When you have all of this found out you will want to look at what you can do without or maybe not spend as much on. With all this information about your current finances you will know where you stand financially and be able to make moves to improve it if needed.

Try to Reduce Your Debt

Once you have information on your current finances you will want to look into to what your current debt level is. You may already have some debt in the form of student loans, car loans or from credit cards. You will want to decrease this debt as much as possible. The lower your debt load the better home loan you can get from your bank or potential lender. Lenders would like to see that your debt load is no more than thirty –six percent of your current income. With a reduced debt you will now look better to lenders.

Think About Increasing Your Current Income

With all that you have found out so far you may need to increase your current income. You may want to consider getting a part time job to increase your current income if you feel you aren’t making enough at your current job. If you aren’t able to take on a new job you should also think about maybe find a new job that pays more to increase your income. Be sure though if you do land a higher paying job that you save money and not spend more since you’ll be making more. With a higher income you will be able to save yourself more money toward your new home.

Create A House Fund

When you buy a home you will need to make a large lump payment towards the home. This will usually be about twenty percent of the homes selling price. Having a house fund should be able to decreases this amount greatly. The fund should be used to go toward your down payment.If you have followed the previous steps hopefully you r able to put a side some money every month that can go toward the fund. With a house fund you can take out a large portion of a down payment on your future home.

Keep  a Steady Job

When trying to obtain a lower interest rate having a steady job can help you. If you have been holding your current job for more than two years that will help you to get a lower interest rate. Having the same job is a good indicator that you have a steady income. A steady job will be a big help to you obtaining a lower interest from lenders.

Build Your Credit

Banks and lenders will not just look at your income but also your credit. You will want to make sure that you have good credit. Your first step will be to check the status of your current credit level. If you find that you want to increase your credit you may want to look into getting a credit card for yourself if you don’t already have one. Once you get a credit card you want to make small purchases on it so you are able to pay off the balance at the end of the month. With a small balance you also lower the risk of not being able to pay off the balance. You don’t want ruin your credit by trying to improve it. With a good credit rating you will be eligible for a better home loan.


By completing all these steps you will know now where your current finances stand and what you may need to do to improve them. Having your finances in order is the first step is the first step in buying yourself a home.