One of the main obstacles to raising enough money to pay a down payment and qualify for a home loan is the amount of debt you pay on your credit card. One reason is that you have very little money left over at the end of the month to put your savings toward a down payment. 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 difficult to pay off a mortgage while paying off credit card debt. Too many bad debts will also show a spending problem, making it risky to invest in yourself.
Dealing with the bad debt you have is imperative if you finally want to be financially fit to take on mortgage payments, or even save money for a down payment on your future home. If you someday want to be able to afford real estate in La Jolla, for example, look at homes for sale in La Jolla and set a goal of how much you need to save so you can move there one day. This is not wishful thinking, this is setting goals. Once you decide it’s time for you to get financed to buy a home someday, you’ll need to exert a concentrated effort to get out of bad debt. Here are some thoughts for you to ponder on this.
The first thing you should do is reduce any high balances on your card. Your credit card debt carries interest rates that significantly hurt your finances. Unlike interest rates on mortgage payments, they are not tax deductible. The reality is that it will be very difficult for you to save with a huge interest rate that eats away at your monthly income. Reduce rates by reducing your credit card balance. If you’re only paying the minimum amount 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 offered by your credit card company 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 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 reduce your card balance is still the most reasonable and effective way to get rid of your credit card debt.
Paying off your bad debts little by little is part of the solution. The other part has to do with not accumulating more debt on top of the existing ones. Learning to distinguish between things you need and things you just want and learning how to control your spending will go a long way in not only saving for a down payment on your home, 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.