As the mortgage market gets harder to get into, tried and true remedies to put you in the forefront of purchasing a home may be your best answer.
You may have heard the rule of paying yourself first. It’s true. No matter how small or large your paycheck, this is one of the primary beginning steps to get you into the American dream.
If you have a large amount of bills due each month, start by paying them first. Take a look at your bills and figure out which one will give you the most rewards by paying it off first. Usually this starts with a credit card, with credit card companies able to charge you between 15 and 30 percent interest, it stands to reason that they are the first bills that you should pay off. Can you come up with even an extra $20.00 per month?
Make your minimum payments each month to all your debt. Use the $20.00 to pay to your credit card to get that principal down. Once this first one is paid off take the amount of your minimum payment and the $20.00 and start paying the next bill off. Once that one is paid off, take the two minimum payments and the twenty dollars and pay the next one off. Then pay the next one off the same way. Once the first one is paid off, the others seem to just fall into place. Keep this up until all are paid off.
When you have paid the last one off, take all the minimum payments and the twenty dollars and put them in an interest bearing savings account on a monthly basis. Do this for at least one year and then you have your down payment for your new home and you already know the payment you can afford since you have been using it all these months to pay off your other bills.
Do not cancel all of your accounts. Having credit available and not used also brings up your credit score. When you are finished with all of this, your credit is back on track and you can get a better interest rate.
Of course I am not an accountant and you may want to discuss this with your accountant first, but this does actually work. Use this to get into your dream home. I would like to see that you are able to get into your dream.
Remember that there are some things that you should do while doing this:
A. Make a commitment to yourself to not incur any more debt or make frivolous purchases.
B. Cut up your credit cards. Some people put one credit card in the safety deposit box, in case of a dire emergency. I have also heard of people putting the credit card in a zipper freezer bag and freezing it in a bowl of water. This way when you feel you need the money, you have to wait to use it. It will help you decide if there is a better solution.
C. Do not close all of your credit accounts unless you have a high annual fee. Keep one or two cards open and inactive.
D. Get a copy of your credit history. Make sure it is accurate. If it is not accurate, fix any problems.
E. Use your library card and borrow books on getting out of debt. Not only will you save money buy borrowing the book instead of buying it, but you also will be less likely to buy a latte from the coffee shop next door.
F. Pay cash for your purchases. Not only does this make it less likely that you will buy some things, it also gives you a better place from which to negotiate.
G. Do not buy unnecessary items.