could be that you are going to take $100 out of each paycheck and put it directly into savings and not touch it for 6 months.
Take the time to look at the things that you need to do to reach your goal and write them down on a piece of paper and, again, keep it within reach. You will need to refer to this from time to time to remind yourself what you need to do on a monthly, weekly, or even daily basis in order to reach your goal. Just keep it together with your goal; you can look at both of them at the same time. Look at that! You’ve already streamlined your activities!
Your plan can include financial as well as personal goals. Getting ready to buy your first home is not all about money. It’s about getting your whole life in order. Maybe you want to add a new fitness and eating schedule to your plan.
SIDE NOTE: Remember, when your body gets the nutrition and exercise it needs, it works better. The same goes for your brain.
How are you going to stick to your plan?
This part may seem hard but it isn’t. I’m going to give you the secret right now. Are you ready? Here it is. You will stick to your plan because the day you right down your goals and your plan to reach those goals you will make a conscious decision to stick to your plan and reach your goals.
Wait a minute. Did I just say the same thing twice? What I’m saying is simple. You’ve just got to stick to it. Always remember that no one else is going to do it for you. It’s up to you. Just remind yourself of that anytime you are feeling discouraged or down about what you are doing. You’ve got to keep going everyday and believe that you can reach your goals because you can.
Look around you. How many people own homes? A whole lot of people own homes. How do you think they got there? It wasn’t easy for everybody and not everybody grew up with money or inherited a house. Most people worked hard for it. They planned, they saved, they sacrificed, they put their plan into action, and one day they were able to own their own home.
You just stick to your plans and you will reach your goals. Remember, it’s up to you and you can and will do it. Tell yourself this… “I don’t quit. I don’t give up. I don’t know how.” Over and over and over again until you believe it. I didn’t just make that up for this book. A good friend of mine gave me the same advice and I used it. I said that to myself over and over again, especially when the going got extra tough. I know it can work for you too!
How much money should you save?
You should save as much money as you need and more. I know that’s not what you wanted to hear but it’s true. After some research, you will discover approximately how much money you will need for a down payment on a home. After you know that, add in some extra money for closing costs. It really depends on the type of loan you are going to use, which I will talk about in more detail in Chapter 3 on Financing.
For the sake of an example, let’s say that you are going to use a Conventional Mortgage to purchase a $100,000 property. You will probably need about 20% of the purchase price as a down payment, so $20,000. You will also need approximately 3.5% for closing costs, so $3,500. So you are looking at about $23,500.
I want to tell you like it is because if I’m not upfront and honest with you, I’m not really helping you. Right? If you don’t have anywhere near that kind of money right now, I don’t want you close this eBook and walk away because there is good news! A Conventional Mortgage is by no means the only way to go. Plenty of other options exist and you can talk to your Lender, when you choose one, about the other loan programs available to you. Don’t worry. Read on!
Also, I’m quite sure that you will need to buy, fix, or even replace things after you move in. The Home Inspection, which I talk about in Chapter 7, will prepare you a little bit more for any additional costs but just know you will need some extra money.
Believe me when I say that something will come up. It just always happens. It’s part of home ownership. Don’t get me wrong, home ownership is an amazing thing but there are some costs associated with it. If you prepare for them though, you will be very happy that you did.
So first figure out how much you want to pay for your house, figure out how much of a down payment you’ll need, then add on, approximately, 3.5% for closing costs, then an extra 2 – 3% for any surprises. Then save save save! Like I said, Chapter 3 on Finances will help you a lot with this. Just remember that when you do the work up front and prepare, you’ll be happy and less-stressed in the long run!
How do you repair your credit?
Credit Repair is a funny thing. It really depends on what is wrong with your credit. Do you have debt you need to pay down that you can afford, are you behind on your bills or are you behind on loan payments?
If you’ve got a lot of credit card debt that needs to be paid off, just start putting a little extra money towards it each month. I know we don’t all have extra money to put towards credit card debt. If that’s the case, stop using the credit cards first. It might seem rough. Pick up the goals you wrote down and look at them again. It will help a lot!
See if you can spare any extra money each month. Maybe shop a little smarter at the grocery store, or skip buying that new pair of $100 jeans, or that new pair of $75 shoes. I’m sure you can find a way to save money if you want to bad enough. It’s all up to you.
If your debt gets bad enough and it’s just out of control, a Debt Consolidation company is always an option. You will hear mixed reviews on them. I had a good experience with one. I liked it because it was a non-profit company. They helped me contact my creditors, cut out late fees and interest, and consolidated my debt into one monthly payment. That allowed me to make one payment monthly to them and not worry about paying multiple creditors each month. They took care of paying my creditors for me. Eventually, I paid off all my credit card debt that way.
Some lenders will have restrictions on lending money to people that have used debt consolidation companies. They mostly want you to be out of the program for a given amount of time first. After that, you may be able to get approved for a loan. Don’t let this bother you. Like I said, I used one of these companies. I also got a home loan from a very reputable lender after my debt was paid off.
SIDE NOTE: If I was able to do it, and I was, then I know that you will be able to do it too!
Why shouldn’t you take on any new debt?
You shouldn’t acquire any new debt now that you’ve decided to move forward with your goal of owning your first home. Why is this? It’s because new debt is exactly that, new debt. Why do you want to take on more financial responsibility when you are just now trying to put together a plan to get yourself in better financial shape? Does that make sense?
Think about it. If you are trying to pay off $10,000 in credit card debt in order to be able to purchase a new home, why would you go to a local electronics store and open a charge card with a $2000 limit in order to get that new 46 inch flat screen TV for the living room in your apartment. Trust me, it’s not worth it. I know from experience.
Stay focused on your goals and your plan. Resist the urge to take on new debt even if it’s for something
