First, Pay Off Old Debts
If you are looking into purchasing your first home, you might be tempted to start saving every penny you can for your down payment. But in reality, there are some other payments you should be making first…
If you have any outstanding debt, the time to pay it off is now. Not only will a reduced debt load make it easier for you to qualify for a mortgage, but you will find that the costs of homeownership will quickly eat into any money you had planned on putting aside for paying old bills. Old debts also collect interest, which means the longer you hold on to them, the more they cost you.
But as far as homeownership goes, the biggest problem with old debt is the approval for a mortgage. Less debt and smaller debt payments will mean a mortgage company will trust you with a larger amount to purchase your home with. A higher debt load may limit the size of your mortgage, forcing you to look at smaller homes than you were hoping to see, or look in neighborhoods that you had hoped to avoid.
Either way, you should adjust your savings to unload some debt, and still have some savings left for the down payment.
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I help clients examine a variety of California home loans to find the best one and utilize all the tools at my disposal to showcase a comparison of loans. If your goal is to find a home loan that improves your financial standing, pays off debt, and you want information on how to use your home loan to leverage your financial position then you've come to the right place. DRE #00646652
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