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Category: Finance Tips

7 Credit Mistakes to Avoid as a First Time Home Buyer

There is always a lot of excitement involved in buying your first home. This excitement is what carries first time home buyers away, causing them to ignore some of the most important details and they end up making costly mistakes. A lot of people rush through the transaction without even taking time to think of the factors that surround their financial situation or the mortgage itself. This might be dangerous to you in the end. That is why you need to focus on certain issues when preparing to buy your first home to avoid making these mistakes. Some of the mistakes to avoid include:

  1. Ignoring your credit status: your credit status is the very first thing your mortgage lender will check out in order to determine how they are going to lend you the money. It is therefore very important to check your credit. If it is not a good score, you should work to make it better so as to get a mortgage with better terms and interests rates. Keep in mind that you will probably be paying back your mortgage for five years or more, so the better the rate, the more you can save. Fortunately, there are financial advisors who can help you increase your credit score just before you apply for a mortgage to avoid paying heavy charges for the loan in the end.        Check your credit score


  1. Getting into more debt soon after acquiring a mortgage: what a new loan will do is to lower your credit score even further. This will not be good to you because it might affect your mortgage repayment rates. Improve your credit score


  1. Avoiding mortgage pre-approval: what many first home buyers do is to wait until they find their dream home to get a mortgage pre-approval. They do not realize that the pre-approval is very significant as it helps one determine whether they meet the criteria to qualify for the mortgage. It is good to do this beforehand, and then you will easily get the money once you have a home in mind.


  1. Not preparing your assets: potential lenders would love to see your liquid cash to determine whether you qualify for the loan you are applying for or not. Failing to prepare your assets on time may deny you a chance to get a good mortgage on time. You might also end up with an expensive mortgage.


  1. Job hopping: shifting from one job to the other is not a smart thing when you are looking for a home loan. This is because it shows how inconsistent and unstable your income is. Home loan lenders want to be sure that you will be able to repay back the loan as per the signed agreement, which may not be possible when your income is unstable.


  1. Not shopping widely for mortgage facilities: many first time buyers do not spend enough time shopping around for the most ideal and most reliable credit facilities. They are usually in a rush to get a loan, and they make so many mistakes in the end. For a good loan, you need to spare some time to shop for the best, trustworthy and reliable lender. Compare the rates too, so as not to end up paying more charges than you should.


  1. Ignoring the mortgage document: the terms of the mortgage agreement are written in the mortgage document, which is why you need to go through it carefully and be in agreement with it before you sign it. Ignoring such a document may bring unexpected surprises later on when you start paying back the loan.

Does earning more lead to financial freedom?

When you are in a financial rut, you may start many of your sentences saying, ‘If I only earned more I would…. However, it is worth noting that financial freedom has nothing to do with the amount that you earn, or your potential to earn more. Instead, you need to look at what it is that you have, and how you can build on that. In addition, you also need to have a clear definition of what financial freedom is, versus what you think it is.

You may believe that financial freedom and wealth are the same things. This could be that you have more money than you actually need, and could buy whatever you want, whenever you want. Financial freedom is a journey, where you acquire skills to put money aside so that you have enough to maintain the lifestyle of your choice. This should be possible even when you do not have a monthly paycheck that you can depend on. When you are living paycheck to paycheck, earning more may be your solution to get financial freedom. If you have no control of your spending, you will soon discover that even with more earnings, the script of your finances will remain the same.


Going through the Journey

Look at your finances as they are now. It is likely that you spend your entire paycheck on paying bills, and then on maintaining a certain lifestyle. If you were to lose your paycheck, you would be in dire straits and within a few months if you have some savings, you may find that you are struggling to survive. The first step of your journey to financial freedom is to spend less than what you earn and put the rest of the money into savings. Then you need to put your savings to work so that they create their own stream of income. How you do this is up to you, but you should do some research and discover what the options are.

The next leg of the journey is working towards your savings, and the income they generate, exceeding your monthly paycheck and covering all of your expenses. At this point, it becomes possible for you to start focusing on creating a better life for yourself, by spending your time and energy on something that is much more meaningful. The fact is, by now you have mastered your way to making your money grow and are at the tails of financial freedom.

The final part of the journey is when you have more income than your expenses, and that income is sustainable with minimal effort. This is the point everyone is looking to achieve, and it is a challenging point to get to. It is worth remembering that this is not an automatic point one can reach, instead, it requires a lot of hard work to get there. It is not about how much that you earn, it is more how much you put away. This will mean making sacrifices, and at the end, you will be glad that they all pay off.


Quick Starting Tips

With your current salary, you can attain financial freedom by trying the following: –

  • Cutting down your monthly expenses by choosing cheaper options.
  • Increase your savings, even if it is a few cents each week until you can put away larger amounts.
  • Increase your income by starting a small business that can give you a little income. It will have all the potential to grow with time.

In response to the first question, No, earning more does not lead to financial freedom. Good money habits are the solution.

5 Tips for Affordable Housing

One of the essential needs for human beings is the need for shelter, also known as housing. Housing is also the largest investment that most people will make, one which can leave them financially crippled for years. To purchase a home, many people need to take out a long term loan known as a mortgage and keep up with the payments until the loan is fully paid off. The issue is that the mortgage payments are usually high, and are rarely flexible enough to cushion changes in income or credit mistakes. To prevent these issues, you need to find affordable housing, a mortgage that you can pay off with ease to better help you manage your finances. Here are five tips to help you find affordable housing: –

  1. Get Rid of Debt

Getting a mortgage is choosing to go into debt. This debt becomes challenging to manage when you already have a large amount of other debt that you are dealing with. To get an excellent lending rate on your mortgage, the lender will evaluate the amount of debt that you already have to determine your financial commitment. With a better lending rate, you will be able to afford an upgraded home with ease.

  1. Save up for the Deposit

The larger the deposit that you save up, the lower the mortgage that you will have to take. A lower house payment means that you have less interest to pay back, and could even mean that you take a mortgage out for a shorter period of time. Depending on where you are making the purchase, most lenders will be happy to give you a mortgage with a 10% deposit. Aim to save up to 25-50% of the cost of the house you want to buy, and you will save more in the long run.

  1. Consider your Comfort

There are a large number of people who get trapped into housing debt by trying to purchase much more than they can actually afford. This is because they are concerned with keeping up appearances. True, people may admire your house, but they will in no way admire the debt that you accrue. It is better for you to start with a small home and work your way upwards. The first home that you purchase does not need to be your final one. It can be a starter home as you grow in life and in your career. Always purchase what you can safely afford.

  1. Watch your Wages

Before you plunge into purchasing any housing, consider your wages or your salary and how you are paid. Are you employed full time or do you run a business? What is your monthly cash flow? Are you paid per hour? Being able to honestly answer questions about your income will help you assess how much that you can afford to pay for housing. Lenders prefer to offer mortgages to people who have a consistent income history, so you may need to work towards that. Ensure that your income has been consistent for at least two years before you choose to make a home purchase.

  1. Compare with your Rent

If you have been paying a certain amount in rent each month, and have been comfortable making that payment, look for a mortgage that allows your payments to be around the same amount. This way, you meet the end goal of owning a home that you can afford, without fear of shattering your finances.


Affordable housing is not simply looking for a cheaper place to live or downgrading your lifestyle. Use these tips to make wise decisions, and purchase your own home, stress-free.