Consolidate Debt: Live Within Your Means

By Debbie Wilson
Loan Page Columnist

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Buying a home may be one of the biggest decisions you'll ever make. But will your new mortgage allow you to live within your means? Only if you limit your current cycle of credit card purchases, consolidate the debt you already have, and stay away from a few mortgage pitfalls.

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Credit Card Offers

As a new homeowner, you've probably found yourself bombarded with credit card offers. And while it may seem wonderful to have so many options available, if you are truly in the market for a quality credit card, choose wisely. In other words, read the fine print. Check for annual fees, interest rates based on balances, payment penalties, etc. And don't try spending money you don't have by wrapping your credit card debt into your monthly mortgage. By doing this, you only extend your credit card debt over a 30-year period. Remember, there is no such thing as free money!

How Debt Affects Your Mortgage

If you are looking to purchase a home, the time to start thinking about your mortgage is now. Having too much debt can definitely lower your chances of buying a home or financing a mortgage. And, making late payments or skipping payments can be just as bad for your credit history. The most important thing you can do is to start working on improving your credit today.

Credit Card Fixes

Fixing your credit card debt problems may be easier said than done, but don't give up. Look to consolidate credit card balances to a low interest rate card. Try to make more than the minimum payment each month so you can actually begin to pay off your principle balance and not just the interest portion. And finally, begin making drastic changes in your lifestyle. Limit credit card purchases. Get an idea of what your future mortgage and household expenses will be and practice living within those means before you buy. Then, when that momentous day arrives, you'll be ready to make the financial leap to the perfect mortgage, free of excessive credit card debt.

Source
www.money.cnn.com

About the Author
Debbie Wilson owns and operates a lakeside resort. Her previous experience includes profitability consulting for a national healthcare company. Debbie holds a B.A. in Business Management with a minor in Physical Education.

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