How to Manage Debt So You Can Buy a Home

If you’re struggling to save for a down payment on a house, or you simply want to own your home sooner than later, you might consider getting some help from a debt management program. 

Debt management programs help you pay down or reduce your debts while also giving you extra cash. Not only can they help you save money, but they can also help you become debt-free sooner. The Compean Group outlines five debt management strategies to consider if you want to buy a house in the next 6-12 months.

Make a Budget and Stick to It

Start by making a budget and sticking to it. One of the best ways to make money work for you is to have a budget, stick with it, and avoid living beyond your means. When you’re living within your means, you’re likely to spend less on any given day. You’ll also save more money over time, which can help you build up your savings account.

Debt Consolidation

Bankrate notes that one debt management strategy is to consolidate your debts. This helps you pay off high-interest credit card balances, store cards and loans, which can help lower the total amount of interest you’re paying. Your monthly payments may be lower, depending on how much debt you have.

Debt consolidation can also help reduce the stress that comes with juggling multiple bills, as well as improve your credit score by consolidating high-interest credit card balances into one low-interest balance.

Home Equity Line of Credit (HELOC)

If you have a good credit score, a home equity line of credit is a great option to help you buy a house. With a HELOC, you can get money for your purchase or for renovations on your current home. 

You’re borrowing against your own home equity instead of using someone else’s money. So, if the value of your home goes up and you need more money to pay off your debt, you’ll be able to borrow against it again.

Debt Settlement

Debt settlement is a popular option for those who can’t afford to pay off their debts in full (or don’t want to). It’s also an option if you owe more than you own or if your income has decreased and you can’t afford to make your monthly payments. 

With debt settlement, MarketWatch explains that you negotiate with your creditors on the amount that you should repay. If they agree, they will stop all collection efforts and settle the debt at the negotiated amount. You might be able to get this process started without any paperwork or fees.

Work With a Professional

Working with a professional is a great way to reduce your debt quickly. They can help you manage your money and hold you accountable for your spending, all while working on getting your spending under control. Speak with The Compean Group for assistance on the best course of action to take in your home-buying journey.

Form an LLC

If you’re a business owner or thinking about starting your own business in the near future, forming an LLC may be the best choice for you. LLCs offer benefits that other business structures don’t have, such as tax advantages and limited financial liability.

This can help you save money that would otherwise go toward things that other business structures require. Please note, though, that every state is different when it comes to LLC laws and regulations. As such, you’ll want to make sure you’re familiar with how to start an LLC in Texas before proceeding.

With these tips in mind, you’ll be better prepared to manage and pay down your debt as you get closer to homeownership. Remember to set a budget and stick to it, consider debt consolidation and be creative when it comes to cutting costs wherever possible. Soon you’ll be settled in and enjoying the fruits of your labor!

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The Compean Group refined the selling and buying process for our clients to help them avoid the unnecessary headaches and frustration, hence our raving reviews from clients. Call us today at 832-777-3904 to learn more! 

By: Katie Conroy