One of the biggest obstacles to being able to put together enough money to pay a down payment and qualify for a home loan is the amount of debt you pay off on your credit card. One reason is that you have very little money left at the end of the month to put your savings towards a down payment on the house. Also, having too much debt will make it difficult (if not impossible) to get a high enough credit score for a home loan. Of course, the logical explanation would be that it’s going to be hard to pay off a mortgage while paying off credit card debt. Too much bad debt will also show a spending problem, making it risky to invest in yourself.
Dealing with the bad debts you have is imperative if you want to finally be financially fit to take on your mortgage payments, or even save money for a down payment on your future home. If you want to one day be able to afford real estate in La Jolla, for example, look up La Jolla homes for sale and set a goal of how much you need to save so you can move there one day. This is not an illusion, it is setting goals. Once you decide it’s time for you to get your finances to buy a home someday, you’ll need to exert concentrated effort to get yourself out of bad debt. Here are some thoughts for you to ponder on this.
The first thing to do is reduce any high balances on your card. Your credit card debts have interest rates that significantly hurt your finances. Unlike the interest rates on your mortgage payments, they are not deductible from your taxes. The reality is that it is going to be very difficult for you to save with a huge interest rate eating away at your monthly income. Lower rates by lowering your credit card balance. If you’re only paying the minimum due on your card to save some money for a down payment on your house, try doubling the amount you pay (double the minimum amount due) to pay off your credit card debt. faster.
Another option you can consider is to look at the interest rates your credit card company offers and compare them to other companies that have lower interest rates. As long as you’re careful to read the fine print to make sure other additional hidden fees don’t end up causing you the same problems in the long run, then it may be wiser to consider transferring your debt to them. However, increasing your monthly payment to lower your card balance is still the most reasonable and effective way to get rid of credit card debt.
Paying off your bad debts little by little is one part of the solution. The other part has to do with not accumulating more debts in addition to the existing ones. Learning to distinguish between the things you need and the things you just want and learning to control your spending will go a long way in not only saving for a down payment on your house, but also successfully paying off your mortgage over a long period of time. . .
To help you with your goal of buying a home, increasing your productivity can also help you reduce debt and have more disposable income to spend and save.