Tips On Managing Your Money To Help Save For a New Home

For most peoples, when you were a kid, it would only take a few dollars to get through the week. The household chores or saving up to buy a housepart time job enabled you to buy pretty much anything you wanted because your overhead was much lower.  After you get through school and get your first full time job the majority of people want to get rid of that heap they have been driving since high school and look for something new. Most folks tend to finance the car and thus beginning the subtle escalation of ones overhead or cost of living.

The cars, boats, bikes and then the apartment, townhome, or house is next.  As time goes on that $150 per week part time job that used to cover your expenses begins to barely cover your gas and food.  These are the reasons it is difficult to save for a new home, but it is still possible to complete this task.  It is important to understand that managing your money while saving for a home is only a temporary sacrifice that will set you up for a lifetime of good financial stability.  The corners you will cut, the lunches you will pack for work and the movies you rent from Redbox will all be worth it in the end.

The first task is to have a written budget. Have you ever gotten that paycheck on Friday and by Monday it’s all gone without even a simple goodbye?!  The reason is because you didn’t keep track of your spending and for this reason the money spent itself without you even knowing.  Writing down a list of where your money is to be spent BEFORE you receive it is the way to go.  Simply list everything out while leaving some room for fun things and stick to the list!

After the list is complete it would be worth going back a month or two to see where you actually spent your money.  After you realize that the budgeted amount you wrote down for eating out should be no more than $150 a month and that number ended up being triple what you budgeted in past months will be your starting point.  Some people believe they are very conservative and just don’t make enough money but after you find the past months you spent $300 on restaurants or bars along with $75 on coffee shops, $150 on miscellaneous clothing and $150 on entertainment this all adds up to over $600!

The example may seem a bit excessive but try to write down your expenses and look back to see what you actually go through each month, remember you are saving for your very own home! What most don’t realize is after the budget is created and tightened up is when the magic happens. On paper you may have only a few hundred left over to put in savings each month but when you have actually lived it and stayed dedicated there is usually MORE money left over, this is because you are aware of where the money is going and you begin to surpass your own penny pinching.

A written budget is most important but being disciplined over time will be the toughest challenge.  The best way to keep this going is to set a small goal, maybe save an extra $100 for the week and celebrate the small win.  Developing a bar chart you can fill in as you go and place it on the refrigerator or a place you see every day right next to a picture of a house you always wanted or even a picture of a BBQ grill in a back yard with a group of friends to keep your goal in mind.  These actions will keep you concentrated when you feel like going out to the movies with friends or a restaurant you will look at your chart and see that $25 or $50 would be better saved and staying in doesn’t seem pointless.

I can’t stress enough how important it is to be living on scorched earth while saving for something like this but keep in mind if you need clothes or miscellaneous items you can still purchase them but be sure they are in the budget, set a limit and stick to it!  Don’t go to the mall with an open checkbook, have a plan for the work pants or shirts and don’t go over the designated dollar limit you predetermined.

Remember each extra dollar spent on the polo shirts you wanted will just push you back even further and considering your closet is full of the entire last year’s line just continue wearing them for a little while longer, this is all temporary!  The closer you look at the person in the mirror the sooner you will find the problem with the spending.  In the meantime continue to research properties, neighborhoods, and communities with the MoveMaps on www.moversatlas.com.

Home Buying Credit Myths: You Can’t Buy a Home Without Any Credit

As you go through the years from childhood to being young adult, and then an even older adult you hear the concerns buying a home without any creditfrom your parents, grandparents, friends and even colleagues that credit is extremely important.  Without credit you probably wouldn’t be able to buy expensive items and with bad credit you certainly wouldn’t be able to buy these items with reasonable interest rates.

Credit is a gauge of how you have made financial decisions throughout your entire life.  The almighty FICO score is what the credit mongers are concerned with, but is it fact or fiction?  Believe it or not the FICO score is a rating that involves an algorithm of how much debt you have been in and out of! Wait so the more debt the better, you ask?  Essentially there is a specific balance between the amount of credit you have, your payment history, loans amounts, credit card balances etc.

The highest credit score is 850 and the lowest is 300 and your credit score involves three major credit bureaus. The rating is their way of calculating the risk of loaning you money.  One problem most people are missing here is that if you have CASH and zero debt and don’t borrow money your credit score goes away!  The score does not go to ZERO it will just show up as not being calculated.

The home buying myths concerning credit are not necessarily true, depending on what you heard.  Just because the norm is to make sure you have a good credit score to pre-qualify for a loan doesn’t necessarily make this  amFACT.  It’s just like renting a home or apartment, if you didn’t have a credit score could you obtain the residence?  Well the answer is yes and that also goes for buying a home.

This does take a little more effort because it is not “normal” because normal is a percentage of DEBT to income ratio and in your case without the credit score and 20% down your ratio ends up being income to income ratio and not every mortgage company knows how to enter these numbers into the computer without the debt value…talk about a monkey wrench.

Here’s the situation and just to be clear a BAD credit score is different from NO credit score, the bad score will need to be cleaned up.  On the other hand no credit is not earth shattering but you will need to seek assistance from a mortgage company that will sit down with you and look at your physical income numbers and your history of payments (i.e. cell phone, water, power) along with what you are putting down.

Typically most are qualified for a mortgage that is far more expensive then what they actually need.  It goes with renting a house, many times large companies have the same issues with not have a credit score; this is a good opportunity to find a place that is being rented from a homeowner.  The funny thing is people with cash may even have the majority of the rent money ready to be paid for a year or six months but due to the lack of DEBT score the person is denied for not being “normal”.

Bottom line it IS possible to get a home without a FICO score but you will need to have 20% down just like everyone else and complete your due diligence in finding a good mortgage company that believes paying with cash rather then debt is a good thing and not a bad thing.  In the mean time save your money and do as much research as you can when looking for a house, I suggest using the tools at www.moversatlas.com to assist in your investigation.

Best Advice For Buying A Home After Bankruptcy

Buying a home after bankruptcy presents a number of challenges.  Declaring bankruptcy severely damages your credit and significantly lowers your credit score.  This effectively destroys your ability to purchase a home or any other large item buying a home after bankruptcyfor some time.  In today’s economic climate, getting a home loan can be difficult, but the damage bankruptcy does to a person’s credit is temporary and there are a number of things you can do to improve your chances of finding a lender and buying the home of your dreams after bankruptcy.

The best thing you can do is give yourself time.  Most lenders will not even consider issuing you a loan until at least two years after your bankruptcy has been discharged.  On the bright side, two years isn’t that long of a wait and there are many things you can (and should) do during that time to improve your credit and increase your attractiveness to lenders.  The very first thing you should do is get a copy of your credit score.  This will help you more fully understand where you are financially and allow you to spot any mistakes that might be dragging down your credit score unnecessarily.  If you do spot any mistakes, dispute them with the credit agency that issued your score.

After you’ve gotten a handle on where you stand, you can begin working to improve your credit score; with proper planning and discipline your credit rating will improve over time.  Keep in mind that the overall goal here is to prove to lenders that you can be trusted to pay back money that you have borrowed.  Improving your credit score is a way to accomplish this.  While it isn’t necessarily advisable to take out additional credit, obtaining a secured credit card or making regular payments on an installment loan are two methods people use to improve their credit score.

A secured credit card is basically a card whose credit limit is dependent on the amount of money you have deposited with the issuing bank and your previous credit history.  With this type of card, a savings account is used as collateral on the credit available on the card.  As you’re rebuilding your credit, you should only use a fraction of the credit available to you.  In other words, don’t max out all of your cards.  Also, make sure your payments are on time and over the minimum amount required by your bank.  Don’t bounce any checks either as these can also negatively impact your credit score.  Less obviously, try to stay at the same job for at least two years and maintain your current income level.  Lenders like to see stability when they’re evaluating who they’ll give a loan to.   Finally, make a commitment to growing your savings account.  Putting money in the bank will lower your debt-to-income ratio and allow for a larger down payment.  This is important since the larger your down payment is, the more likely lenders will be to talk to you.  A larger down payment can also lower your interest rate.

Once your credit rating is in better shape and you’re ready to get serious about looking for a home, consider getting a loan from the Federal Housing Administration (FHA).  FHA loans are often more accommodating for those who have a bankruptcy in their history than loans issued by standard lending institutions.  Additionally, be ready to pay a higher interest rate.  A past bankruptcy often means a higher interest rate; but a larger down payment can lower it for you.

Finally, make sure to purchase only what you can afford.  Mortgage calculators can help you figure out what sort of down payment you can expect.  Best of luck in your home search; if you’d like to check out communities you’re interested in -  have a look at our MoveMap, it makes finding the neighborhood that’s right for you easy and fun!