How To Conquer Debt 101

Debt can be a very scary thing. If you are not careful, before you know it you have mounds of debt laying at your feet. How can you handle it if you end up creating more than you can handle? Here are a few steps to help you get back on your feet.

Make more than the minimum payment. Credit card companies love it when you pay just enough to get by every month. At that rate, you’re mostly paying off interest and barely scratching the surface of your actual debt. You will want to pay more than what they are asking for in order to decrease payments and minimize those monthly accruing interest charges. Pay off debt with the highest interest rate first. It goes almost without saying, but it's something that a lot of people forget. If one credit line is charging you 11% APR (interest over the course of a year) while another credit line is charging you 9% APR, focus all your attention on the debt that falls under 11% interest rate. Pay it off before even touching the other debt. You want to pay off the one with the highest interest rate in order to decrease your interest debt. Sure the other cards will continue to charge interest but it will be at a lower rate, and in return not charge you as much as a higher rate in the long run. Talk to your credit card companies. Explain your financial situation and ask if there is anything they can do to help. Many will lower your interest rate for a period of time and/or waive current late fee balances, to give you a better opportunity to catch up. Especially if you are one that has never had a history of late fees and or credit problems in the past. Never close cards with existing balances. It might seem like an easy way to get a handle on your debt, but it'll do horrors to your credit score, and you'll still be on the hook for the debt. All this will do is send your credit utilization (your available limit v. your current debt) down, further driving down your credit score. Learn more here on how to increase your credit score. Move your debts around. Though transferring money from a credit card with 12% interest to a card with 0% interest may damage your short-term credit, barely chipping away at your debt because your interest is so high will damage your finances in the long term. Shop around for long-term, low- or no-percent interest rate transfer opportunities, or look into transferring some of your debt onto a low-interest card that you already have. Keep the following in mind: How long the low interest rate will last. Depending on your total debt and how quickly you think you can pay it off, 0% interest for six months may not be as good a deal as 2% for 18 months. Liquidate big ticket items to help lower your debt. If you just bought a car, or a memory foam mattress, or a new dirt bike, think seriously about your ability to keep such big-budget items, especially if you're paying for them on installment. Liquidating your big-ticket items now will mean less financial hardship for you later on. This is one not everyone likes to do, but if you are in a bind it’s better to wait and re buy an item later when you are in a more stable financial situation than to have an item and have headaches continuously over debt each month.

Needing more help? Have more questions about credit? At Texas Premier Mortgage, we have licensed loan officers who specialize in helping people to be able to afford their home whether it be right away or in the future. They can help sort through your debt and offer assistance as needed. Why not give them a call today so they can help you decrease your debt so you can afford that dream home you have always wanted. Contact Steve Head, President of Texas Premier Mortgage to begin your steps to decreasing your debt and gaining that perfect home.

How do I Know if I can Apply for a Mortgage?

Many factors come into play once you decide you are ready to take the next step: applying for the mortgage. It sounds really scary to one who has not ever had any experience with owning their own home. With a knowledgeable lender who can lead you each step of the way there really is nothing to worry about at all! A few things that will need to be looked at. The lender will want to see financial stability. A potential lender will look for steady employment, with a single employer for the past two years or at least employment in the same field. Your credit history and if you have any late note payments will also be a factor. Lenders pay particular attention to any rent or mortgage payments that were more than 30 days past due. They will also look into your current bank statements. In order to qualify for a mortgage, most lenders require that you have a debt-to-income ratio of 28/36. This means that no more than 28 percent of your total monthly income (from all sources and before taxes) can go toward housing, and no more than 36 percent of your monthly income can go toward your total monthly debt (this includes your mortgage payment). Lenders will ask you to provide some of the following information as well: Your current credit report. Pay stubs for the past 30 days. W-2 forms for the past two years. Information about debt obligations, including car loans, student loans, tax liabilities, liens (including federal tax liens), bankruptcies, etc. Recent statements from your checking, savings, mutual fund or other accounts. Tax returns for the past two years if you're self-employed. Proof of any supplemental income. Records of any negative credit accounts that have been paid off. Records of child support or alimony if applicable. At Texas Premier Mortgage, we are here to assist you with every step of the process. Contact Steve Head

today at 281-627-4222 to help you begin your journey to purchasing your next home!