You’ve reached that time in your life where you’re ready to buy Santa Cruz real estate. Even though the mortgage approval process can be intimidating, you can get yourself ready to apply for a loan. These are the first steps to buying your home:
Make a List
First, make a list of your finances. Include all your income, and factor in your normal monthly debts. Miscellaneous bills, like your daily coffee or weekly magazine, should be listed too. Write down everything that you spend each month.
Calculate what 28% of your income is. Most loan officers recommend not spending more than 28% on your housing costs. You may not want to take on a mortgage loan for the maximum amount offered without consulting your list to see what money is actually available for you to spend.
Decrease Your Debt
Once you’ve have detailed your finances, it's time to make a budget. A good budget can help you eliminate wasteful spending which will allow you to pay off more of your debts. When planning your budget, don’t forget to include some personal money.
Start with the small debts first. Pick the credit card with the highest interest rate and smallest balance and work from there. After one debt is paid off, use the extra money that you’re saving from the first card, and pay off the next. This way, you should be able to pay your balances down quickly.
It only takes a couple of months of good payment practices to begin to see your credit score go up. With a good credit score, you can get a better interest rate. This will save you thousands of dollars in mortgage payments over the life of the loan.
Save For the Down Payment
You’re ready to start saving for the down payment on your Santa Cruz real estate. It has to be paid up-front at the loan closing, but sometimes the seller will pay the closing costs.
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