Getting ready to purchase a home can often leave you up at night worrying about how you will manage the heavy debt load on top of your already existing debt. But with some careful planning and savvy financial strategy, you can ensure that your debt is under control before taking on a mortgage. Here are a few easy ways you can shrink your debt as fast as possible, getting you one step closer to homeownership.
Make Bi-Weekly Payments
Paying down your credit card will show a lender that you can manage debt appropriately. The less interest you are paying to credit debt, the more money you will have available for paying your mortgage. It will also help to boost your credit score. So, try to bulk up on your credit card payments to pay it back faster. Bi-weekly payments will add two extra payments a year and will also show a lender you are serious about managing debt.
Another excellent way to pay back your debt faster is to consolidate all your debts into one easy-to-pay loan. A registered line of credit often comes with a much better interest rate than what your credit cards offer. One low-interest rate will allow you to pay back your debts much easier and faster.
Get A Second Job
All the money you make from having a second job can go directly into paying your debt back faster. This extra source of income will also help to boost your financial security, which is attractive to lenders.
Make Lump Sums
If you get a raise or a big tax credit put it immediately towards your debt. Making lump sum payments is the fastest way to eliminate your debt.
Cut Out Services
Own a gym pass you never use? Not watching TV all that often? Shaving down on some of your monthly services that you barely use can help put more money in your bank. You may also want to consider selling your car if you live close to public transit and amenities, and use that money to pay down your credit card debts.
Create A Budget
What every debt owner needs is a well structured, disciplined budget. But before creating a budget, you should know how much debt you already have and from what institutions. First, make a detailed list of all your debts and create a plan for paying these off. Then work out a monthly budget that allows you to have enough money after your expenses to pay down your debt.
With heavy debt being a major roadblock to purchasing a home, it’s important to change your habits in order to get your debt load under control. By substantially reducing or eliminating your debt you will be able to achieve your homeownership goal sooner.
“Talk to a Mortgage Agent at The Mortgage Advisors to help get you started on your path to home ownership”.