Affording a Home

Can you really afford a house? If so, how much house can you afford? To determine this answer will take serious financial planning, and the best time to start is at least six months before buying the home.

Although buying a new home may seem like an American Dream or romantic venture, the reality is that the house you can afford depends on your current income and debt obligations. You must be able to pay your mortgage, satisfy all your current debt, and still have money left over each month to put in the bank. When you consider all these issues, you may find you will actually be shopping for a lower-priced house than the anticipated dream home.

If after careful financial evaluation, you realize you cannot afford the house of your dreams, don't feel tempted to count on expected annual raises, thinking that eventually you'll be able to afford the higher payments. Most raises are generally 4% to 7%. In bad times, you won't get a raise, while inflation overtakes you. In the worse case scenario, you may get laid off and you won't be able to afford your monthly bills. If you don't have a budget that includes a savings account worked out on a spreadsheet, you are faced with a serious debt problem waiting to happen. If you cannot recite from memory all the creditors you owe and how much you owe them, you have a credit problem.

MONTHLY BUDGET SHEET

At the top of your planning list, you must determine what your mortgage payments will be, while not ignoring other monthly expenses. Remember, you need this complete research, and an organized budget sheet, to guard against becoming seriously in debt.

For example, besides the home loan, monthly expenditures to add to your budget sheet may include:

* Homeowners insurance,
* Homeowners Association Fees,
* Flood insurance,
* Mortgage insurance,
* Utilities,
* Garbage,
* Cable TV,
* Groceries,
* Lawn service,
* Pet groomer,
* Doctor and veterinarian bills,
* Auto loan and/or unexpected auto repairs,
* Drycleaning bills,
* Savings account,
* Lunch money for spouses and kids, and many other obligations.

Second on your list is to clean up your credit report.

YOUR CREDIT REPORT
Your credit score is the single most important factor determining whether you'll get approved for a mortgage, car loan, refinance loan, or credit cards, and what your APR will be. If your score is low, you'll pay very high interest rates, up to 23%. Most people are also unaware that their credit score also affects how much they pay for car insurance rates too. Many insurance companies run a credit check on you before selling you insurance.

CALCULATING YOUR CREDIT SCORE
You should get your credit report at least once every year to verify it for accuracy, and make certain your credit score is up to par. If your credit is clean and you have your down payment ready to go, you won't need as much time to plan for a new home.

Everyone has a credit score calculated at the time your credit report is requested. It's based on over 100 different proprietary variables and algorithms developed by Fair Isaac (FICO). The range is 300 to 850. You can get your credit score from Equifax Score Power, True Credit, or Consumerinfo.

Most lenders consider people above 650 to be prime borrowers, meaning they will most likely be approved at favorable rates. According to a credit report from Equifax, 71% of the people with a credit score from 500-550 will default on their credit. Another 51% of buyers with a credit score from 550-600 will default on their credit. It is for this very reason that lenders run your credit report and focus on your FICO Beacon score.

FACTORS AFFECTING YOUR CREDIT SCORE
The most important factor affecting your score is the length of your credit history. College students generally have low scores, while 30-somethings have higher scores. If you have too many accounts open, they can lower your credit score also. Opening several department store credit card accounts and excessive financing accounts also lowers your beacon score.

So, take an inventory of your credit cards. Do you have department store credit cards, appliance store credit cards, and computer store finance cards that are no longer used? What's worse, even if a store is defunct, your account may still appear on your credit report as open. Call all sources and close these accounts since you never use them.

Just remember, it takes about 30 days for the closing transactions to appear on your credit report. Once you successfully dispute and remove negative items from your credit report, wait 30-60 days and order another copy of your report to verify that the bad debt was removed and you now have a higher score.

Genesis Font is an SEO and Developer for LoansInteractive.com > Mortgage and Loan Officer Websites. We also offer Quality Web Hosting Services.

---

Top 10+ Ways to Jumpstart your New Year?s Finances!

Of course, these don't have to be done in any particular order! Just pick one or two that particularly apply to your situation. * Create your 2005 filing system. This might include new... Read More

Reporting Identity Theft

Would you know what to do if you suspect that your personal information had been stolen and used by thieves to open new accounts? It's important that you take the right actions to... Read More

Bankruptcy Laws Get Tougher - More Expensive

If you've been thinking about filing for bankruptcy, your best bet might be to file now.A new bankruptcy law takes effect in November that will make it harder and more expensive for most... Read More

How to Choose Wisely a Credit Card

So, you've made the decision to apply for a credit card. It's an important step for any consumer. Whether this is your first application in an effort to establish your credit, an addition... Read More

Budgeting your Savings - Did You Let Your Piggy Bank Get Away?

I think most of us have at some point in our lives. Some how we forget to feed the little piggy. And, like most neglected "pets", your piggy bank will disappear if you... Read More

10 Tips To Save Money When Dining Out

Here are some tips that can help you save money when dining out. Keep in mind that these tips are intended to help you save money when dining out at a restaurant type... Read More

Budgeting: A Tough Love Way to Handle Your Household Budget

Developing and living by a household budget is by far the best way to get your expenses under control which, in turn, can mean a much less stressful life.However, many families find it... Read More

A Quck Lesson in Saving Money

Did you have a piggy bank when you were a child? I did. Mine sat empty for a long time until my mother convinced me that I should really start putting my pennies... Read More

Saving Money - The Magic 20 Percent

Saving money is not easy and is made more difficult if you have a short-term outlook regarding your personal finances. If, like many people, you are living from one pay cheque to the... Read More

Organizing Your Finances - Thinking Outside the (Shoe) Box

If you're like most people, your personal financial records are most probably kept in less than "Good Accounting Practices" standards. For example, stashing old ATM receipts and hanging on to a stub showing... Read More

Im Broke, How Can I Afford...

I'm still amazed every time someone comes to me complaining that they don't have any money to put into their business and that they're broke.I mean what have you been doing with your... Read More

Basic Bank Accounts Failing the Basic Needs of Consumers

The lists of bank and savings accounts that are available to most people are bewildering. A quick look at a comparison site like Moneynet or Moneyfacts will reveal thousands of different products. Unfortunately... Read More

Budgets And Eating - Can They Co-Exist?

Whatever your reason for having a tight budget, the truth is that going to the grocery store without a plan is a BIG budget breaker. And sadly all that cash ends up vanishing... Read More

Live Green; Save Green!

Have you seen the recent article on a new "green" residential high rise in Battery Park? It's called The Solaire. For a look at the hopeful future of architectural efficiency, check out the... Read More

Your Dry Cleaner?s Double Standard

Women are charged more for dry cleaning services. Don't fume, find a better way. While it is true that the practice is unfair it is also true that we have options for keeping... Read More

Budgeting -- The Critical Flaw That Causes Most Budgets to Fail

Budgeting. It's a word we're all familiar with. Everyone knows what a budget is, right? Yet how many of us actually make and stick to a solid monthly budget? The truth is that... Read More

The Benefits of Banking Online

How many drawers did you have to look through to find a bank statement the last time you needed one? Chances are you did not lay your hands on it as readily as... Read More

Personal Finance ? Why You Should Compare, not Despair

Sorting out your personal finances can be a tricky and exasperating time. Whether you are looking to obtain money through a loan, protect your finances with life insurance, medical, travel or car insurance,... Read More

Students Investing in Their Future Need to Manage Their Finances Today

With the A-level results coming out, the long wait for UK school leavers hoping to go to university will soon be over. All the hard work that has been put into achieving the... Read More

Planning Ahead with Your Finances

If you, like most people, have not seriously considered what steps you should take for planning your finances and are now planning on buying a house, getting married or having children, you will... Read More

Budgeting the Key to being Financially Stable

Single Mother's in need of Financial GuidanceBudgeting is key to being financially stable. A budget is a systematic plan for the expenditure of a usually fixed resource, such as money or time, during... Read More

How to Save for A Down Payment

Saving for a Down Payment is hard work, so it's a good idea to really want to own your own home by the time you begin your Savings Account. It's difficult to turn... Read More

Government Grants - Beware of Scams

As the saying goes: "Buyer Beware". If you see ads claiming you qualify to receive a "free grant" for education, to start a home business or to payoff unpaid bills, be wary. Scam... Read More

Budget Planning - Its Elementary My Dear Watson

Does it feel like you have to be Sherlock Holmes to solve the mystery behind balancing your personal budget? Are you living a mysterious thriller where your realization of "financial independence and security"... Read More

Expenses A ? What Are They And What Can We Do About Them

It is crucial as an individual who is striving for financial freedom to be able to recognize the different type of expenses in our lives. It is a proven theory that it is... Read More

Dramatically Improve Your Stock Trading Success

Get Access to Realistic profitable strategies & discover the mindset to dramatically improve trading success.* Avoid those confusing "cookie cutter" technical analysis tips and tricks that you can read anywhere else for free.*... Read More

If I Had a Structured Settlement, I Would Use It to Pay for Gas

Has anyone been to the gas pumps lately? Soon $3 a gallon will be the asking price and we'll either have to become cyclists or create some additional income. I plan to do... Read More

What?s New in Checking ? From Designs to Photos

Just about everyone has a checking account. Checks present easy ways to make payments and they have simply become a way of life. Most checking accounts are pretty much the same, but there... Read More

Developing a budget? Watch out for Those Budget-Bursting Gremlins

If you've developed a household budget to get your spending back in line or to just reduce stress, good for you! Creating and sticking to a budget isn't easy by all means. But... Read More