Friday, August 21, 2020

How to Reduce Debt When Buying a New Home

Owning a home is one of the most rewarding and life-changing events that you can experience. Before you can own a home, though, you have to buy a home, which can sometimes be fairly complicated. 

If you’re carrying a lot of debt, this can make the process even more complicated, which is why it’s good to try and reduce this debt before you commit to purchasing the home of your dreams.

Cut Back on Non-Essential Spending

When working to reduce debt, it’s important to take a long, hard look at your spending habits. Every dollar that you spend needs to be accounted for to determine how you can cut back so that more money can go toward servicing your debt. 

Of special importance is your non-essential spending. Once you figure out your non-essential expenses, it’s important to cut these out quickly so that you can free-up much-needed capital.

Look for Alternative Mortgage Programs

The best way to reduce your debt is to avoid going into debt in the first place. Fortunately, when it comes to buying a home, there are several alternative mortgage programs available that can get you in a home while reducing the amount of debt that you’ll owe after you move in. 

To get an unbiased opinion on the best mortgage options for you, it’s a good idea to talk to your real estate agent about your current needs.

Take on A Side Hustle

Though being a workaholic certainly has its drawbacks, there’s nothing wrong with working a little extra to earn money to help you reduce your debt. Whether you’re delivering groceries, writing articles, walking dogs, or doing something else you enjoy, you’d be surprised at how quickly the income from these second jobs can add up. 

Plus, you may discover that you enjoy your side hustle so much that you opt to make it a full-time career.

Negotiate Your Rates

The largest amount that you’ll spend when servicing debt is paying for the interest that you accrue. If you can, then, it makes sense to negotiate with your lenders to see if you can get a lower interest rate on any of your debt. 

Considering how quickly interest can accrue, you could end up saving thousands of dollars with even a small reduction in your interest rate, meaning that this pursuit is definitely worth the effort.

Gaining Momentum

The good news about lowering your debt is that this process tends to gain momentum the longer you stick with it. As you reduce your debt, your credit score will increase, meaning that you’ll be eligible for lower interest rates that will help you save money. No matter how big your debt is, though, the most important part of the debt-reduction process is taking the first step to allow the process to begin.

Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at or Twitter @BrookeChaplan

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