Chicago Homebuyers Should Get Finances In Order Before House Shopping
A tax credit is a nice incentive if you've been thinking about buying a house. But a tax credit alone doesn't mean you're ready, caution Chicago bankruptcy attorneys.
Many first-time buyers have been rushing to take advantage of a credit of up to $8,000 (or $6,500 for existing homeowners who have lived in their current house for five or more years) since, in order to qualify, buyers must sign a contract by the end of April - this month.
But don't worry if you don't make the deadline - and don't rush if you're not ready. Unlike first-time homebuyers were mistakenly led to believe last decade, home buying isn't a walk in the park. Taking the time to have your financial ducks in a row first goes a long way towards ensuring a smooth buying process. In fact, in the long run it may save you more money - and heartache - than any homebuyer tax credit.
While a tax credit might make buying a home less financially painful right off the bat, keep in mind that you're going to be paying your mortgage for years afterwards. And not just a mortgage, but utilities, homeowner's insurance, property taxes and, of course, maintenance (you never realize how much you miss having a landlord until your dishwasher starts leaking).
If too much debt has made a mess of your finances, no tax credit is going to bail you out. You don't want to buy a house and lose it to foreclosure a few years down the road, when your credit troubles finally catch up with you, right?
Just like a marathon runner trains long before race day, a homebuyer who gets into financial shape before signing the contract has a better shot at finishing on top. That means paying more than the minimum so you stop adding to your credit card balance and start paying it off. It means cutting your costs enough that you can afford to pay all your bills on time. It means getting serious about saving part of your paycheck so that in an emergency you won't have to whip out the plastic and ring up more credit card debt. Not only will getting out of debt and tidying up your finances now make things easier once you're a homeowner, but it will help you qualify for a home loan in the first place.
So what if you can't afford to pay make more than minimum payments? It doesn't mean you're destined to rent forever - it just means you need to concentrate on getting out of debt before getting into a house. Fortunately, bankruptcy can provide an affordable way to chip away at your debt and start rebuilding your finances. Why not sign up for a free personal debt analysis with a bankruptcy attorney in Chicago - and learn how bankruptcy can open the door to a brighter financial future?