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If you want to buy a home, youll probably need to make a substantial down payment. Putting down 20 percent can help you avoid paying hundreds of dollars each month for private mortgage insurance. You may be thinking about using all the money in your savings account for a down payment, but that could be a big mistake.

Emergencies and Repairs
You could lose your job or become unable to work because of an illness or injury at any time, or a family member could be unable to work or have unexpected medical bills. Thats why you should always have an emergency fund with enough money to cover at least three months worth of living expenses.

When you rent an apartment, you can call the landlord or maintenance department to fix any problem. When you own a house, the responsibility for repairs and maintenance falls squarely on you. Many people are unprepared for the total cost of homeownership. Having money set aside in a savings account for repairs and maintenance is much better than paying bills with a high-interest credit card.

The house you bought might need renovations to make it a comfortable or safe place to live. Upgrades could easily cost tens of thousands of dollars. You wouldnt be able to fund these projects with savings if you emptied your account to pay for a down payment. Using a high-interest credit card could leave you overwhelmed with debt and unable to afford your mortgage.

Liquidity
A savings account can be accessed at any time. When money is tied up in a house, it can be harder to utilize. If you suddenly encountered a financial problem, it would be much easier to withdraw money from your savings account than to get a home equity loan or line of credit, especially if you just recently bought your house and didnt have much equity.

Other Priorities
You probably have other financial goals that are as important, if not more important, than buying a house. High-interest credit card debt could take up a huge chunk of your monthly earnings, and high balances could make it difficult or impossible to buy a house or car with a favorable interest rate. The sooner you pay off your credit cards, the better off youll be in the long run. Retirement savings grow over time through compounded interest. If you havent started investing for retirement, you should before you buy a house.

Take a Balanced Approach
Buying a house is a major investment. It can be tempting to put all your savings toward a down payment, but you should also focus on other priorities and be prepared for the unexpected. Make sure you are building an emergency fund, paying down debt, and saving for retirement, and consider delaying a home purchase, if necessary, to keep your priorities in balance.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.

Published with permission from RISMedia.

Many people have debts that they are unable to repay. Sometimes, this is a result of overspending. In many cases, it occurs because of a job loss, an illness or injury that makes it impossible to work, or a divorce. When people are buried in debt, bankruptcy may seem like the only viable solution.

Bankruptcy does not need to cloud your finances forever. With some hard work and patience, you may even be able to realize your dream of owning a home. Here are some strategies to improve your situation and qualify for a mortgage.

Steps to Take
The first thing you need to do is to have the bankruptcy discharged. If you are still in the process of filing for bankruptcy or working with a credit counselor, you will not be able to qualify for a mortgage.

After your bankruptcy has been discharged, request copies of your credit report from the three main credit agencies: TransUnion, Equifax and Experian. Mistakes on your credit report can make it difficult to obtain a mortgage. If you find any, write to the credit agencies, provide documentation and ask them to correct the information.

You will need to rebuild your credit to prove to lenders that you are able to manage money responsibly. One way to do that is to apply for a secured credit card. The issuer will provide you with a line of credit limited to the amount of money you have in an account with the bank. Avoid making purchases that will use too much of your available credit line. To take it up a notch, make payments on time and pay as much as possible to keep your debt low, avoid high interest payments and rebuild your credit score.

You can also improve your credit score by making payments on an installment loan. This is a loan with monthly payments, such as for a vehicle, student or personal loan. Making payments on time every month can show lenders that you are a low risk borrower.

Since mortgage lenders look for borrowers who are employed and stable, stay at your job for as long as possible to improve your chances of qualifying for a mortgage.

It is generally a good idea to wait at least two years after your bankruptcy is discharged before applying for a mortgage. While you might be able to obtain a loan sooner, it would likely be at a higher interest rate, which would result in high monthly payments. While you are waiting to apply for a mortgage, save as much money possible to put toward a down payment and closing costs.

Working Toward a Brighter Future
Declaring bankruptcy is a setback, but it does not have to prevent your dream of owning a home from becoming a reality. Take some time to rebuild your credit, save money and prove to lenders that you can be trusted to repay a loan. With time and dedication, you can be on the road to obtaining a mortgage and living in the home of your dreams.

Published with permission from RISMedia.

Figure out what items you need. Don’t hold onto things just because of sentimental value or because you might need them “someday.”

Separate items by rooms and areas according to their function. This will allow you to create an organizational system both you and your kids can understand and adhere to.

Use empty closet space beneath hanging clothes for a shoe rack or dresser.

Buy shelving units to use in rooms or closets. Arrange belongings in boxes, baskets or containers that are easy to stack.

Install wall hooks to hang pans and other items.

Look for furniture with built-in storage.

Use empty space under furniture for storage, but keep it neat and organized.

Published with permission from RISMedia.

When shopping for a mortgage, one of the most important decisions youll have to make is the length of the repayment period. Most homebuyers choose 15- or 30-year mortgages, but some lenders offer additional options. The length of the term will have a major impact on your monthly payments and the amount of interest youll pay over the life of the loan. Before deciding on a mortgage term, think carefully about your current financial situation and goals.

How the Loan Term Can Affect Payments and Interest
A 15-year mortgage has significantly higher monthly payments than a 30-year loan because the principal needs to be paid off in half the time. Payments on a 15-year mortgage are not quite twice as much as payments for a 30-year loan because the interest rate on a shorter mortgage is lower. Paying off your mortgage in 15 years could allow you to save tens or even hundreds of thousands of dollars in interest, but you might be more strapped financially because of higher monthly payments.

Which Loan Term Is Right for You?
If youd like to save for retirement and/or your childrens college education, choosing a 30-year mortgage with lower monthly payments would leave you more room in your budget for those priorities. If youre relatively young and your savings were allowed to accumulate interest over a period of decades, they could outpace what youd pay in mortgage interest. Low loan payments could also allow you to pay off high-interest credit card debt and free up money for other priorities.

If you took out a 30-year mortgage, you might be able to pay it off sooner by making extra payments or by paying more than the required monthly amount. Some lenders charge prepayment penalties, so check with yours before you pay extra.

If you dont have much other debt and youre already saving for retirement and your childrens education, you might want to consider a 15-year mortgage. The payments would be much higher than they would with a longer loan, but youd pay less in interest. If you plan to retire relatively soon on a fixed income, it could make sense to pay off your mortgage quickly to avoid paying for housing after you stop working.

Before you choose a loan with a shorter term, think about your current income and whether you could afford high mortgage payments on top of everything else in your budget. Also think about how secure your and your spouses jobs are. Make sure you have a substantial emergency fund in case one of you lost your job or became unable to work for some reason.

Look at the Big Picture
Lenders offer mortgages with a variety of terms for homebuyers in various circumstances. Consider the amounts youd pay each month and over the life of the loan, and choose the term that would also allow you to achieve your other financial goals and live comfortably.

Published with permission from RISMedia.