Getting your finances in order is perhaps the most important thing you can do prior to beginning your search for a home. After all, finding the perfect home will be futile if your finances are in disarray. As such, here are some things you can do to get them sorted.

1. Track your Bills

Track your bills and credit card receipts for three to six months, and develop a realistic budget based on what you are actually spending. Add in estimates for healthcare expenses and vehicle maintenance and repair.

2. Control your Debt

Pay down debt. Lenders want less than 30 percent of your income to be spent on loan repayment, including your mortgage. Your mortgage will typically be between 25 and 28 percent of your income, your total debt load should be about 8-10 percent of income.

3. Watch your Expenses

Watch your nickels and dimes. It’s easy to keep track of major expenses like rent and utilities, but it’s the little expenses that ruin a budget. Write down everything you spend for a month—you’ll discover quick ways to cut expenses.

4. Boost your income

Consider a part-time job or freelance work to boost your income so you can qualify for a higher mortgage.

5. Save

Start a savings plan just for your new house, and build monthly contributions into your budget. If your employer offers direct deposit, put your savings in the bank before you get your take-home pay.

6. Accumulate a 20% Down payment

Aim for saving a 20 percent down payment. While it’s possible to get a lower initial payment, your interest rate will be lower and you’ll avoid pricey mortgage insurance premiums.

7. Establish an Employment History

Build up a steady employment history. Most lenders want to see stable employment with two years on the job for best interest rates.

8. Monitor your Credit exposure

Use credit wisely to build your credit score. Pay your bill in full each month where possible, and never max out your credit limits


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