Personal Home Finances

It is extremely difficult to set goals for your financial future if you do not have a clear idea about your present financial situation. Unfortunately, most people live under the illusion that they truly understand their current financial status. Most people sit down once or twice a month to look at the outstanding bills and instead of looking at the entire amount payable they often look at the minimum amount payable to get by for that month. They pay the minimum amount and are happy that some amount is left over from their income that they can afford to splurge with. This results in the debt continuing to rise but most people are oblivious to this.

To get out of a situation that might lead to a debt trap, it is important to take an inventory of your personal home finances. The first step is to make a list of your expenses during the past year. Examine your checkbook, credit card statements and any other receipts that you may find. If you primarily use cash to make purchases, this might be a bit difficult, unless you have preserved all your receipts.

Categorize your past year spending into essential fixed expenses, essential variable expenses and discretionary expenses.

Essential fixed expenses are payments that you must make each month and the amount you pay per month is locked in. Examples of these payments include mortgage payments, car loan payments or rent. The other kind of essential expenses include your monthly spend on groceries, gas and your energy bills. These are variable because the amount you pay depends on your consumption level. Discretionary expenses are expenses that are not essential. Examples include spending money on purchasing new clothes, entertainment and vacations.

Seriously evaluate your spending patterns over the past year. Do you really need to splurge this year on new clothes and an exotic vacation? Can you walk or bike to work or the grocery store? Can you be more careful with energy conservation? Be honest with yourself and you’ll be able to spot areas where expenses can be cut down.

Take a look at your credit card outstanding amount and make an effort to quickly pay off the entire amount instead of just the minimal amount. Credit card interest rates are among the highest and paying off the outstanding can save you a lot in terms of interest costs.

Taking a little time to plan your purchases and expenditures can help you keep your expenses in control and your cash flow clear, allowing you to handle your personal home finances better and building better savings.

Tips for Getting Home Financing

There are many home finance solutions for people who want to buy a home. With all the various options for financing and loans, it is possible to get the house you’ve always dreamed of owning. The recent financial crisis has taught us to be a little more careful with our finances, which is why it is important for us to study our options thoroughly and carefully and make sure that we are in a position that enables us to pay for our housing loans and other expenses that come with buying a home. It is important that we don’t jump the gun to make sure that we won’t have any home finance problems in the future that may lead to a lot of debt and foreclosure.

The first step in buying a home is getting a loan. This is where home finance can get tricky. Just because you are able to meet the lender’s screening criteria, it doesn’t mean you’re automatically qualified for the loan. Banks and other lenders tend to award loans to people to show that they have the ability to repay the loan and that they are not overloaded with other debts and expenses to pay for. This is why we must create a balance sheet and compare our income with the expenses we incur every month. The information we can get from this is beneficial not only to the lenders, but to loan applicants as well because it shows us if we can handle the financial burden or if it will bury us deeper in debt.

If you think your credit scores and income statements can get you the loan you need, you can now start applying for financing. A lot of people look for a house before meeting with a lender’s loan officer and end up getting disappointed when they don’t get approved or they are offered an amount smaller than what they need to buy the house they chose. One way to avoid disappointment is to get a pre-approved loan. Before house hunting, meet with a loan officer and apply for pre-approval. If the lender believes you are qualified for the loan, you are given a letter of pre-approval which gives you an idea of how much you will be getting from the loan and you can now start looking for a house that you can afford.

Home Finance

Owning a home is every individual’s dream. However, most people cannot afford to buy a home with savings of their own and need their purchase to be financed by a financial institution. A loan provided by a financial institution to purchase or renovate a home is known as home finance. Purchasing a home offers several advantages. Perhaps the biggest advantage is that it allows you to build home equity when you pay the mortgage each month.

It is a common myth that paying monthly mortgage payments is much more expensive than paying rent. Often mortgage payments may be less than the rent. Unlike rent, which might escalate each year or every few years, mortgage payments are usually fixed throughout their tenure. The interest paid on a mortgage payment is tax deductible. Also, you can take a loan against your home equity at attractive rates of interest and convert it to cash.

With the thought of buying a home, there arise many questions and doubts. The questions that one needs to think about include one’s purchasing power and the monthly payment that can one easily afford towards the home purchase. These are the main criteria that need to be considered. They help one decide the budget for the purchase of a home and narrow down the search to homes that fit in the budget.

You should also consider other initial and ongoing costs. These include a down payment, closing costs, home owners insurance, mortgage insurance, utilities, maintenance and property taxes.

Before beginning the process of looking for a home, you should figure out whether you are able to get home finance and an estimate of what you pre-qualify from a lender. Getting pre-qualified is an indication to the real estate agent that you are a serious and knowledgeable buyer.