Learning more about home equity and the finances of home ownership through YourEquity can help you make smart decisions moving forward. Plus, coming up with a realistic plan to pay down your debt is the key to getting a mortgage for your dream home.
Here’s how to put together a plan you can stick to while cutting your household expenses and increasing your income.
Down Payment Assistance
Because you need to balance paying off debt with saving for a down payment, you may have concerns about saving enough for a sizable down payment. Thankfully, you can turn to down payment assistance programs for help.
For instance, you may be able to take out a loan, qualify for a grant, or use tax credits to fund your down payment.
It’s important to note that you may need to meet certain requirements in order to get different forms of assistance.
Redfin states that your eligibility may depend on your career, your location, your overall income, and the type of home you are planning to buy.
To find out if you are eligible for any sort of assistance, you may want to check in with a financial advisor well before you begin house hunting.
Create a Payoff Plan
In order to get rid of your debt, you’ll need a roadmap to guide you. That’s why designing a debt payoff plan is crucial.
The Budget Mom recommends making a list of all of your debts with their minimum monthly payments, interest rates, and monthly due dates. Next, determine if you want to pay off your high-interest debts first or debts with the smallest balances.
Once you’ve decided which debts to prioritize, take an honest look at your budget to figure out how much you can actually afford to pay down per month. Remember, if you can pay more than the minimum, you should do so!
You might also want to consider consolidating your debt. This strategy could allow you to reduce the interest you pay over the lifetime of your loans. Research debt consolidation programs to find out if this is an option for you.
Negotiate With Creditors
Are you worried about paying down particular debts? It never hurts to give your creditors a call and see if they are willing to work with you to establish a payment schedule.
You may be able to extend your timeline to pay off your debts, or you might be able to decrease your interest rates. Don’t hesitate to contact your creditors – taking action could help you save money!
Decrease Your Expenses
Now, you’re more than ready to start making progress towards a debt-free life. But how can you free up more room in your budget to pay off your debts?
If you want to put more than the minimum payments towards your debts every month, you’ll want to begin by cutting down on your overall spending.
For instance, you can spend more nights cooking at home instead of going out to eat. You could walk or bike to run errands rather than driving to save on gas. In addition, buying used clothing and home goods is often cheaper than buying new products.
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Boost Your Income
What if you’ve reduced your expenses as much as you can, but you’d still like to pay more towards your debt? It’s time to think about boosting your income.
This could involve asking for a raise at work, starting a small side business, or doing freelance work for a few clients. Increasing your income can also help you qualify for a larger mortgage loan, making it easier to afford your ideal home!
Paying down your debt will not happen overnight. However, even if you have been in debt for years, your debt does not have to hold you back forever.
If you want to buy a home within the next year, committing to a strategy to tackle your debt will help you get your finances under control. Before you know it, you’ll be debt-free and ready to move into your new home!
Want to learn more about home equity? Check out the resources from YourEquity! Browse our website today for equity tips, helpful calculators, and more.
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