Are you planning to buy a home in the next six months to a year? If so, you might be going over your financial portfolio and wondering how to prepare for the process. Aspiring homebuyers who are carrying debt should make every effort possible to pay down their debts before applying for a mortgage. You may be able to pay off your debts on your own, or you may need to seek debt consolidation services, but first consider getting a free credit/debt consultation from Infinity Credit & Financial Services
These tips will help you create your own debt management plan!
Know What You Owe
Take stock of your debts. Note which lenders you owe money to, how much you owe to each lender, the interest rates, the minimum payments, and the payment due dates. Add up all of your debts to determine how much you owe overall.
Outline Your Plan
Now that you have a clear idea of exactly what you owe, you can come up with a payoff plan. Decide which debts to focus on paying off first. The Balance recommends moving forward by either paying off your highest-interest debt first or your smallest debt first. Tackling high-interest debts first can save you money in the long run, but taking care of your smaller debts right away can also be very motivating because you’ll feel like you’re making progress more quickly. Figure out how much money you’ll need to put toward your debts overall each month and then adjust your budget accordingly.
Reduce Your Spending
Chances are, you’ll need to drastically cut down on your spending to set aside enough money for your debt repayment plan each month. Sticking to a strict budget can be tough, but remember, the reward will be worth it! To reduce your unnecessary spending, Quicken recommends buying used items whenever possible, cooking at home instead of eating out, and tracking every penny you spend so that you can analyze where it’s going.
Remember, you should also focus on maintaining or building up your emergency fund before buying a home. If you can’t make debt payments and contribute to an emergency fund on your current salary, it’s time to start a side hustle to boost your income.
Ask for Help
If you feel like you’re drowning in debt, you don’t have to shoulder the burden by yourself. It’s time to ask for help. You may want to connect with a debt consolidation service like Infinity Credit and Financial Services. Consolidating your debts can make it easier to manage the payments. You could also call creditors to discuss setting up payment plans with them. And if you need help with other areas of your finances, this could be a good time to meet up with a financial advisor. They can support you as you plan for a brighter financial future.
Consider Government-Backed Loans
Paying down your debt while saving up a hefty down payment can be tricky. Even if you can afford a mortgage, saving a lump sum for a down payment is often challenging. If you’re concerned that you won’t be able to save up enough money for a traditional 20 percent down payment, rest assured that you have other options. For instance, you might be a good candidate for an FHA loan. Alternatively, you might qualify for a rural housing loan or VA loan, which would allow you to purchase a home with no money down.
If you plan to buy a home soon, tackling your debt first is a smart strategy. Before you take on all of the responsibilities of homeownership, you’ll want to get your finances under control. By following this strategy, you’ll be ready to buy when you find that perfect property.
Need help consolidating your debt? Infinity Credit & Financial Services can support you through the process. Call us today at 817-863-4231 to schedule an appointment.
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