5 Ways to Prepare for A MortgageBecause everyone gets there.

My parents opened the door to their first real estate when I was eight.

I used to think it was nine. It turns out I was wrong. Close. But wrong. And throughout the year, mortgages, real estate, investing has been a big part of conversations around the dinner table. I had barely turned 18 and I was preparing to build my first house. The government was offering a first home owner boost and an additional building boost and I planned to utilise them.

5 Ways to Prepare for a Mortrage

 

Being so young, I hadn’t had much time at all to get myself in financial trouble, the lending criteria was a little bendier {WAY pre-global financial crisis} and I had great support and advice from my parents. But whether you’re 18 or 48, the things on the list below will get you in good financial shape for when you go to a bank {or broker} to apply for a mortgage;

1.  Pay down/Pay Out any credit cards, closing the limit as you go.

If you have a $20,000 credit card, even if it has $100 owing on it and it’s issued by the same bank you’re applying through, it will still deduct from your lending capacity {what you can borrow}. The theory is, you already have it available, so you COULD use it anytime.

The easiest and fastest way to pay credit cards down is;

  • STOP USING THE CARDS. All of them. Now. Walk away.
  • Pay the minimum monthly payment on all the cards. Do this every month without fail.
  • Select a primary card. A problem child, highest interest rate, penalty interest or biggest monthly payment. Whatever makes it the most expensive to own.
  • Now order all your cards from best to worst using the method you determined above.
  • Have a set weekly amount that you pay onto the primary card.
  • Put any extra money you have onto the primary card.
  • Once the primary card is paid off, close the account and start on the next most vital to get rid of card. BUT keep applying the monthly fee of card one and card and weekly amount to card two.
  • Rinse, lather and repeat until you’re done compounding the payment amount as each card is paid off {i.e. by 4th card you would have 4 monthly payments and a weekly}.
  • Don’t forget to close the accounts or reduce the credit limits as you go.

2. Start saving money

Even $20 a week into an account proves you can do it if you want to. A simple way to do this is to put change into a bowl and bank it at a regular interval, have your payroll department send the amount straight off the top of your pay {we’ve done this, it absolutely works!} or pay it first as if it is a payment for rent or electricity. Your savings must be important.

Next Page: More Ways to Prepare for a Mortgage

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