Are These Money Mistakes Hurting Your Chances at a Mortgage Loan?
If you’re hoping to buy a home, but your mortgage application has been denied, it’s important to get to the root of your finances and determine what’s holding you back. Avoiding these common mistakes could be the solution to making your dreams of homeownership come true.
Using a monthly budget
Recent research shows that creating an annual budget, rather than a monthly one, triggers more conservative spending. This is largely due to the fact that we tend to play it safe when budgeting annually, never knowing what might happen six months down the road. This leads to less debt and more savings over time.
Paying too much in rent
The experts tend to agree that it’s best to spend less than 30 percent of your monthly earnings on housing costs, but many people pay much more. This can make it difficult to save for a home down payment, and it can also mean having to take on unwanted credit card debt for emergencies.
Focusing on credit card rewards
Sure, credit card rewards programs sound fabulous – who wouldn’t want to earn cash back on purchases or rack up free travel miles? In truth, though, studies show that these credit cards encourage a phenomenon called “purchase acceleration,” which causes many consumers to buy things they simply don’t need.
Overspending on last-minute gifts
If you find yourself shelling out far more cash than anticipated around the holidays, you’re not alone. Many consumers, especially those who wait until the last minute to buy gifts, are forced to spend more simply out of convenience. A little planning can go a long way toward finding budget-appropriate gifts for loved ones.
Avoiding common money mistakes and making incremental changes to your finances over time can have a big impact on your future creditworthiness. If you’re hoping to buy a home in the near future, begin working now to clean up your financial act.
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