Don’t Let Debt Derail Homeownership Dreams

Few financial realities are as frustrating as knowing that you earn a good income but you’re mired in mounds of debt. Without that debt load, your income would easily allow you to buy a home that meets your family’s needs. Whether you need to shuffle your obligations every month or have the ability to repay, it can be tough to come out in front enough to save for the necessary down payment that will get you favorable mortgage terms.

Don’t give up! You are not alone, and there is help available. Talk to StarLight Realty about taking the necessary steps to find your ideal home. This will help you aim for the ideal debt-to-income ratio to qualify for a mortgage and probable down payment requirement so you can get that home in six to 12 months. Once you have your ideal home firmly set in your sights, you can work toward debt reduction and saving.

Spreadsheet survey

One way to organize and assess your current obligations is to create a debt management spreadsheet that lists each creditor. Include separate columns for the remaining balance, minimum monthly payment, interest rate, and time left on the obligation. Arrange them with higher interest rates first — typically, these are payoff priorities since they are the ones costing you the most money. However, it may make sense to pay off smaller obligations more quickly so you reduce the number of creditors owed and then apply the freed-up funds to higher-interest debts or those with higher balances.

Now, list all of your household revenue sources and your typical monthly expenses. Take a long, hard look at your discretionary spending — those things you spend money on that aren’t essential like streaming services, meal plan kits, dining out, and gym memberships. Cutting these may save you hundreds or more each month — and you can always start them up again once you are comfortably established in your new home.

Finally, take a look at your current resources and assets, like retirement plans, investment accounts, or any savings that you have started. It may make sense to borrow or withdraw from these accounts to get rid of debt more quickly. You can also approach your financial institution to see if you qualify for a debt consolidation loan that will get rid of multiple creditors and give you one reasonable monthly payment. A willing relative may be another option.

Expert relief

Once you have amassed a complete inventory of your obligations and resources but are still unsure of the wisest approach, reach out to a Florida debt relief expert. A debt management expert understands state debt collection laws, so with a review of your debt inventory, they can assess if creditors are following the laws. You may even qualify for a debt forgiveness program for some or all of your debts.

A debt management expert can also negotiate settlements in which you pay one lump sum that is much lower than the current balance to completely satisfy the debt — without hurting your credit score. They will also give you advice on what debt consolidation options make the most sense for your situation, if any. Finally, debt management also assesses what credit obligations are worth keeping to positively affect your credit score, such as a low-interest credit card — long-term positive payment history is important to mortgage underwriters.

Locking those savings away

Now that you’ve unlocked the chains of debt, you can start locking away those funds in a down payment savings account. Include a line item in your household budget for a minimum amount to put in savings each month. If possible, make this an automatic withdrawal into your savings account. At the end of the month, take any amount left over for the month and stash that away, as well.

Look around for alternative accounts other than your bank’s standard savings account. Some online banks offer better interest rates on savings accounts. Or, once your savings balance reaches a qualified amount, consider moving it into a higher yield account, such as a money market account.

Emerging from the debt tunnel

You can emerge from that debt tunnel and see the light that will guide you to a new home in six to 12 months if you vow to work at it and seek help. A qualified debt management expert doesn’t just give you debt relief — they can give you emotional and mental relief, too. No more sleepless nights worrying about garnished wages or accounts, lawsuits, and incessant collection calls at work or during relaxing family time. Best of all, they’ll get you much closer to your dream of owning a home. Ready to take that journey? Contact StarLight Realty to find your next home.

Photo by Vladislav Muslakov on Unsplash


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