Your Biggest Money Problems, Solved

The Problem: Buying a First House

Forty-eight percent of those 30 to 39 are hoping to become first-time homeowners. The American dream of buying a home is alive and well, but realizing it seems to be getting harder, thanks to the recent mortgage crisis and economic downturn. The key to preventing a disaster is making sure you can afford the house you're buying. "If you're not able to put down 20 percent of your mortgage, you're probably buying a house that you can't afford," Rubin says.

Solutions

Create a budget. Being on one doesn't mean you can never go out to eat or buy new jeans. You just have to choose what you'll spend money on and what you won't. For instance, instead of dinner out, you can eat at home and go out for dessert. "Here, you give up something, but not everything, so it's less painful," says Sarah Young Fisher, CFP, coauthor of The Complete Idiot's Guide to Personal Finance in Your 20s and 30s (Alpha), and a mother of two.

Clean up your credit. In today's market, banks are reluctant to lend money to people who are considered high risk, so "credit scores have never mattered more," Weston says. "To boost your score, use no more than 30 percent of the credit that's available to you, pay down your credit card debt, and pay all bills on time," Chatzky says. The five components of your credit score are: payment history; how much debt you have; length of credit history (the longer the better, so don't close credit cards that you opened long ago, even if you don't use them); whether you've recently applied for credit such as car loans or credit cards (which makes it look like you're going to be borrowing more money, so you're a higher risk); and the kinds of credit you have (lenders like diversity in your debt).

Rough it for a little bit. "When we bought our first home, we were in the process of moving from San Francisco back to Southern California, so we bit the bullet and moved in with my parents until our home was completed," Oswald says. "It helped us save almost all of our income for six months!"

Budget for the extras. "The mortgage isn't the only financial responsibility when you have a house," Chatzky says. You'll now have homeowner's insurance and real estate taxes. If you're moving from a smaller dwelling to a bigger one, your utilities will be higher. Her suggestion: Sit down with a friend who lives in the neighborhood where you'd like to move and who has property about the same size, and ask what he or she spends on things such as heating and air conditioning.

Shop around for your loan. Check online, big banks, and local banks too. "A lot of people shop like crazy for a house and negotiate on the price, but they do no research when it comes to their mortgage," Chatzky says. "This is a huge mistake because there are lots of options out there."

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