First Things First: Getting Prepared to Buy a Home.

Odds are a reputable lender can find something to help you out and get you into a home. But there are things we all should be doing to help ourselves out credit wise and will help immensely when buying a house.

1. Stop financing everything. With 24 low payments of $40 you can own a new phone that will be a relic in a month. You will also hurt your ability to finance a large purchase since you didn’t want to pay up front for the newest flash. Instead of financing the new iPhone, maybe ride that current one a little longer. That extra $40 a month will lower your future approval a few $10,000.

2. Pay down that damn credit card. When looking at your credit report, lenders will look at your minimum payment on a card. This is the easiest number to drop down and improve your ability to be financed. Pay the sucker off.

3. Transfer high interest to a balance transfer card. I realize I am telling you to apply for a new credit card which will lower your credit score, but not paying $150 a month in interest and paying off a large portion of high interest debt will raise your score overall and save you a lot of money. If you like throwing away money to the big banks, cool, keep the course steady. The shareholders will love it.

4. Student loans. I guess bury your head in the sand and hope they get forgiven? One of the biggest oncoming economic disasters will be our student loan debt in this country. Find a way to keep those payments low without accumulating a higher balance on those loans for a quick fix. If you can, pay them suckers off.

Once you’ve lowered your monthly payment obligations as much as possible, chat with your local agent and see who they recommend as a lender (ask for a couple) and go from there. Overall you will be happier in life if you follow these 4 basic finance rules.

Myth Busting - Saving for a down payment

Back in the day when houses cost a cool $100 bill and we defeated the Germans, people had the idea that saving 20% was the only way to buy a house. Interest rates were worse than credit card rates of today, the minimum wage ran in line with affording a normal life style.

But believe it or not, life has changed since then. College degrees don’t get you an amazing job, housing in the region is more expensive than 95% of the rest of the country and it’s not showing signs of slowing down, and more importantly you shouldn’t be paying $2,000 a month on a small house rental.

Today there are so many solutions for buying a house for all sorts of down payments. Let’s go over a couple of items.

• 3.5% down. This is what you need for a basic FHA mortgage if you have a credit score of 580 or above. This type of loan is pretty easy to work with. It does carry Private Mortgage Insurance (PMI) which is no fun, but it’s less than paying someone else’s mortgage for them.

• 3% down. There are programs for 3% down for someone that hasn’t purchased a home in 3 years. There are very little restrictions to work with.

• 0% down. There are a few good options for this number. If you served in our military, thank you for your service and the VA program allows for 0% down with a fee rolled in. This is the best loan. There are a few hoops to jump through, but overall amazing loan.

• 0% down for non military. If you are like me and never served and have no way to qualify for a VA, down payment assistance is the way to go. My wife and I bought our house this way. The state offers down payment loans that carry no interest and have to be repaid when you refinance, sell, or pay off the house. I will cover more about this one in a further post.

Well there you have it, a super simplified reason why 20% is something of the past. If you or someone you know is interested in learning your options, finding out how to buy a house, or looking for some great movie recommendations, drop me a line and I’ll be happy to chat.