1. The Homebuyer’s Guide
Chapter 2
Money For Housing

2. Considering YOUR Financial Situation, Do You
… have a written spending plan for your money?
…. pay your bills on time?
… know how much debt you have?
… pay more than the minimum payment on your credit card each month?
… save some money monthly?
… save money for emergency expenses like a furnace, roofing or plumbing problems? p 9
The Homebuyer’s Guide

3. Why Do You Need a Spending Plan?
Know what you want your money to do for you
Know where your money goes
To know how to save money for your goals
Plan your spending in advance
To know your credit limits and control your debt
To develop your home as a growing asset
The Homebuyer’s Guide

4. The Steps in Establishing a Spending Plan
Determine your monthly net income
Calculate your monthly expenses
Subtract your regular expenses from your income
Keep track for a three to six month period to recognize the ‘flow’ of money, especially occasional expenses
The Homebuyer’s Guide

5. Keeping Track of Spending
Save all receipts
Use a small notebook
Use a method that works for you – calendars, spreadsheets for software, paper and pencil or envelope systems are available.
Spend time each month tracking your expenditures and comparing to your goals for money
The Homebuyer’s Guide

6. Setting Goals for your Money
Be specific about the goals you want to accomplish this month….this year
Write down the goals you want to work on
Take some time each month to determine if you are making progress on your goals.
Use a net worth statement yearly as another measuring tool for your goals.
NET WORTH = WHAT YOU OWN – WHAT YOU OWE
The Homebuyer’s Guide

7. Different Types of Expenses
Fixed expenses
Periodic fixed expenses
Flexible expenses
Indebtedness expenses
Occasional expenses
The Homebuyer’s Guide

8. Ways to Make Money Management Easier
Pay bills at regular times across the month
Keep a schedule of when bills are due
Check to see if utilities can be paid on a budget
Open a checking account
Open a savings account
Celebrate your success with paying bills on time
Recognize the limit for credit for your family
The Homebuyer’s Guide

9. Begin by keeping track of both income (after tax) and expenses for three months BEFORE you estimate your budget. This will give you a good idea of what you REALLY spend your money on. p
The Homebuyer’s Guide

10. Calculate Debt to Income Ratio to find out Your Debt Load
List the monthly payment for all credit cards __________
List the monthly payment for all loans you carry
Not including mortgage __________
Total Monthly Debt __________
(Total monthly credit payments + Total monthly loan payments.
List your monthly income after taxes __________
Total monthly debt payments divided
by monthly income __________
This figure should be less than 20% p. 16
The Homebuyer’s Guide

11. Ratios
38% for housing plus all other debt

12. Importance of Saving
Consider Savings to be one of your monthly bills…just move that amount of money to another bank account like a separate savings account.
The Homebuyer’s Guide

13. Types of Savings Accounts
Regular savings account
Christmas or other Club account
Certificate of deposit (CD)
Money market account
Matched savings account
The Homebuyer’s Guide

14. Ordering Your Credit Report
The Homebuyer’s Guide

15. Summary
Creating a realistic spending plan helps you pay your mortgage on a regular basis.
Knowing how much money you need for your spending plan helps you control for flexible expenses.
Setting financial goals and making a spending plan to meet your goals helps you with confidence that your new home is attainable.
Setting a spending plan helps you to know how much credit is too much credit.
The Homebuyer’s Guide

16. The Homebuyer’s Guide

17. The Homebuyer’s Guide