7 Steps To Getting Your Finances In Order

• 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 your installment debt (car loans, student loans, and revolving balances on credit cards) down to between 8 percent 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. Talk to your lender about what your best option is.
  
• Create a house fund. Don’t just plan on saving whatever’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 cause problems in obtaining loan approval or qualifying for a lower interest rate.
  
• Establish a good credit history. Get a credit card and make payments by the due date. Make sure that your balance on all cards is LESS than ½ of your credit limit.
  
  

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