cash flow Archives

Thinking about buying? If you are serious about owning your very own piece of the American Dream, it makes sense to take inventory of your current finances. By taking a closer look, you will have a better idea of whether you are ready to grab your dream of homeownership by the horns or whether you want to make some adjustments first.

If you haven’t read last week’s post, we recommend you do so. It will help give you a clear idea of what it takes to buy.

Read it now: How To Buy A House In 2019 — 5 Tips

Now, read on. Here are a few considerations before you decide to buy.

Emergency Fund Integrity

Many financial experts recommend that you have 3-6 months worth of expenses saved up in an Emergency Fund. An emergency could be a car repair, appliance replacement, or sudden unemployment. Rainy days happen, and a substantial rainy day fund can help protect you from the financial blow.

While it is true that a bigger down payment will equate to a smaller monthly mortgage payment, it probably isn’t the best idea to tank your emergency fund. You might even consider opening a separate savings account for your down payment, as we mentioned last week: How To Buy A House In 2019 – 5 Tips

Debt-To-Income Ratio (D.T.I.)

You can think of this as a ratio of current monthly income and payment obligations. Your DTI is communicated as a percentage, where lower is better. A low deb-to-income ratio implies that you have a high cashflow relative to your income, and gives the impression that you are responsible with your finances. It also means that you are at a lower risk for defaulting on a payment, which lenders like.

Is your monthly debt obligation higher than you would like it to be? Here are a couple of ways to cut it down without significantly altering your lifestyle.

Credit Cards

Do you have any credit card debt? Your minimum monthly credit card payment total is factored into your D.T.I. If you have a card with a low enough balance that you could pay it off sooner, you could effectively reduce your debt factor. Doing this repeatedly is commonly known as the “debt snowball,” an emotion guided strategy for paying down debt.

Car Loan

Are you working on paying off a car purchase? If you make payments on a car loan that is relatively close to being paid off, paying it off will reduce your debt score by the monthly required payment on the loan.

Credit History

Is your credit history accurate? Do you have a copy of your credit report? It is a good idea to get a copy of your credit report to check for any errors.

You can contact the credit bureaus if you find an error, and work with them to correct it on your credit report. While a ding on your credit history may not be enough to deny your loan application, it may end up costing you big in the form of a higher interest rate.

You have the right to request 1 free credit report each year. Many credit card companies offer this as a service, as do many identity protection services. You can request your credit report and current credit score from Experian, TransUnion, or Equifax.

Need A Second Opinion?

We know that crunching the numbers isn’t for everyone. Even if you are the best candidate for management of your own finances, not everyone feels motivated to sift through their own numbers. At Benchmark, we advocate for the best financial outcome for our clients.

I am willing to help you order your finances so you can make the most informed decision possible. Call me today, or contact me now.

We work with our clients to help you make the most informed decision possible. Call or contact us today.

We work with our clients to help you make the most informed decision possible. Find your branch, and contact them today.

Benchmark brings you home.

If you want to buy a home this year, here are five tips on how to buy a house in 2019. At Benchmark, we make the effort to make it easy to claim your piece of the American Dream.

Watch this video, then read last week’s article linked below.

This New Year, Reach Your Dream of Homeownership

1) Know Your Target Home Value and Down Payment

To be able to know if you can realistically afford to be a homeowner, you should first explore your local housing market to find out how much you should expect your new home to cost.

You can use the “How Much House Can I Afford?” tool to get a realistic estimate. We also have a variety of Calculators right here at Benchmark.us to help calculate a number of factors, comparisons, and scenarios.

To get an idea whether the house you have your eye on is priced fairly, you should also ask your real estate agent for a Comparative Market Analysis. (see also: Find A Great Real Estate Agent The Easy Way)

When you have an idea of the cost of your future house, you can roughly calculate how much you will need for your down payment. Think you need 20% down?

Think again. See last week’s post, “This New Year, Reach Your Dream of Homeownership” if you haven’t already.

2) Know Your Cash Flow

Saving can be challenging, especially if you are not used to tracking your expenses. To improve your chances of saving success, you should know where every dollar that you earn is going every month. Check with your bank or credit union, as many banks and credit unions include tools for this. You can also use third party tools like Mint, YNAB, everydollar or even a simple spreadsheet. The more organized your plan towards achieving the goal, the more successfully you will be able to save.

If you read our previous post This New Year, Reach Your Dream of Homeownership, you will recognize the link between consistent savings and your down payment. A budget can help you do that.

If it will take you several months or years to save for your down payment, you could even consider opening a high yield savings account to get your savings earning as well.

3) Know How Much House You Need

For many, the first home you buy is not the first home you want. If the home you want is beyond your financial reach, it could still make sense to settle on a less expensive buy, if your budget and standards allow.

It could cost you far more money in the long run to wait until you can afford the house you want, when a house you could be happy with is within reach now. You can always “trade up” when the time is right. You will have to make this decision for yourself, but it is something to think about.

In an earlier article entitled Millionaire Tells Millennials To Buy A Home, we mention that David Bach, author of “The Automatic Millionaire” is quoted as saying,

“The fact is, you aren’t really in the game of building wealth until you own some real estate.”

Mr. Bach also said,

“Oftentimes, buying your first home means you’re not buying your dream home. You’re just getting into the market.”

If that isn’t enough, you can read “Homeowner Average Net Worth 3,600% Higher Than Renter” for more reasons to consider getting started sooner rather than later.

4) Know The Steps For Buying A Home

I have a convenient interactive tool right here on my website to help walk you through the steps to take when buying a home.

Discover Your Way Home

We built a tool for our Loan Officer websites that asks a series of questions to give you an personalized step-by-step plan for buying your next home. Need a plan for refinancing? It does that too.

To use this tool for yourself, you will need to find a loan officer in your area Find Your Loan Officer, then click on “The Way Home” in the navigation menu.

To use this tool, you will need to find your Loan Officer and go to their website by clicking the link that looks like this:

Once on your loan officer’s website, look for the “The Way Home” navigation link (below), and click.

5) Keep Your Cool

Do you feel overwhelmed by what appears to be a monumental achievement? We understand. Do you wish it could seem easy? This is what we do every day.

At Benchmark, we have such a great team, that we have been able to make mortgages happen for borrowers who had already been turned down by another lender.

Not sure where to start? No problem. We are honored to help guide to towards your dream of owning your own home with a mortgage that aligns with your personal financial outlook.

Even if you are concerned with debt, your credit history, or even your down payment, let’s chat! If you want to make your dreams a reality, we are here to help make that possible.

Find your branch, and contact them today. If you are ready, you can click to Apply Now. We look forward to helping you reach your goals!Call or email us, or Contact Us today. If you are ready, you can Apply Now. We look forward to helping you reach your goals!Call me, Email Me, or Contact Me today. If you are ready, you can Apply Now. I look forward to helping you reach your goals!

Tag: cash flow

Before You Buy, Do A Financial Self Exam