Page 18 - Hawaii Renovation - Dec 25, 2016

Get financially fit before buying your new home
So buying a new home tops your list of New Year’s resolutions, eh?
As you picture the big mo- ment — the one where you pull up to your dream home in your moving truck, sprint up and unlock your front door — you need to get your finances in shape.
Just like those who make resolutions to run a mara- thon, making this big in- vestment star ts with a plan. Runners know that if they run a certain distance each day, it gets them closer to accomplishing their goal.
“The same is true, in many ways, when it comes to buying a home,” said Eric Hamilton, president of Vanderbilt Mor tgage and Finance.“Before taking on a loan, many homebuyers find they need to build their ‘financial muscles’ and establish ‘healthy’ money habits.”
By following a few tips to reach financial fitness goals, you, too can achieve the
Over 30 Years of Exceptional Work
goal of home ownership.
Do those daily sprints
First, look at the spend- ing choices you’ve been making, and review three to six months’ wor th of bank statements. Consider what is necessar y and what needs to cut back.The goal is to trim the fat in your budget so you can use the extra money to reduce your debt and increase your savings.
Crunch your debt
Take a look at your debts and consider the monthly payments you make. Are there any debts standing in the way of making a house payment affordable? Those are the ones you want to knock out with an acceler- ated payment plan, using the money you freed up by cutting back on unneces- sar y expenses. Tr y focus- ing on one debt at a time, paying close attention to
SPECIALIZING IN NEW HOMES & ADDITIONS
the ones with the highest interest rates to pay off first.
Beef up your credit score
The good habits you ex- ercise today will make all the difference on your in- terest rate later. Put in the extra work to raise your credit score. Your credit score pulls together many details from your past and current debts as well as other financial factors, and
helps lenders determine your creditwor thiness. Making the effort to raise your score is wor thwhile because shaving off even one-quar ter of a percent- age point from a mor tgage loan can potentially save you thousands of dollars in interest over the life of a 30-year mortgage.A credit score factors your history of on-time payments, the amount you owe on your debts, the type of credit
you have, the age of that debt and any recently opened new credit lines as well as other factors.
Increase your intake of savings
Even when paying down debt, it’s still a good idea to star t a small savings plan so you have some cash to fall back on if, say, you need to go to the doctor or get new tires for your car. Star t by opening a sav- ings account and set up automatic transfers each month. Even with $50 a month, you’ll have $600 in one year, which could bail you out of a number of small emergencies. Even- tually, once your debts are paid off, you can diver t those payments right into savings, which also can build your down payment for that new dream home.
Prepare for the big event
All these steps lead to
one main event: buying a home. Once you meet those smaller goals you’re ready for the final push toward home ownership.
First, figure out how much home you can af- ford: look at home prices in your area, use an online loan calculator to esti- mate your payments, and go through your budget. Then gather up the fi- nancial documents you’ll need, including proof of employment, bank state- ments and tax state- ments. Finally, choose a lender that is right for you.
“Following these habits can be challenging from a motivation standpoint,” Hamilton said. “It takes patience, but once you’ve followed the steps to get financially healthy, it is a very rewarding experi- ence.”
This article is courtesy of Brandpoint.
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