Earlier this month, we gave you some tips on how to prepare your home for Thanksgiving. Ready or not, Thanksgiving will be followed immediately by the holiday shopping season; and if you’re looking to buy a home in 2016 or 2017, you may want to approach the holidays a little differently this year. Keep reading to learn how you can save for a down payment and get your credit mortgage-ready, despite your end-of-year expenses.
- Rethink Holiday Travel: Air travel prices spike in the weeks around Thanksgiving, Christmas, and New Year’s. If you travel to celebrate with you family, consider an alternate date for your celebration and reduce your costs significantly.
- Tweak your Wishlist: Family and friends may ask what you want for Christmas or Hanukkah this year. Consider this an opportunity to save money. You’ve been wanting to ditch cable? Ask for a Netflix gift card! Is your commute getting pricey? A gift card for an oil change or gasoline can go a long way.
- Use your Points: Have you been hoarding credit card rewards? You may be able to use them to buy your friends great gifts from major retailers.
- Don’t Neglect your Savings Account: A good rule of thumb has always been to put 10% of your paycheck directly into a savings account. It may be tempting to ignore this rule when holiday expenses are looming, but don’t worry. Your employer may be able to split your direct deposit so that you can automatically contribute to your savings rather than spending your cash on holiday goodies.
- Seasonal Holiday Jobs: If you have the time, consider picking up a part time job around the holidays. You could use the extra cash to bankroll your Christmas list, or save your earnings for that down payment. Either way, the jobs are out there. snagajob.com estimates that 82% of employers hire extra staff for the holiday season. Retail and delivery service providers are always looking to hire in order to account for the shopping and shipping boom, but hotels and restaurants tend to bump up their staff, too.
- Become an Amazon Seller: You can sell used book, games and more on Amazon, but beware. There are restrictions and guidelines you’ll need to meet during the holiday season.
- No New Accounts: You’ll probably get a lot of offers to open a store credit card while you’re out shopping, but opening a new credit account can hurt your chances for mortgage approval. Along with the new account appearing on your credit score, you’ll be more tempted to charge those gifts and increase your debt.
- Don’t Add to Existing Credit Card Balances. Credit card utilization is one of the metrics used to measure your credit score. In fact, it comprises 30%-35% of your score calculation. Maxing out just one low-credit limit card can ding your score by 45 points and disqualify your mortgage application.
- Avoid Large Purchases: The holiday sales may seem tempting, but you need to avoid large purchases if you want to buy a home. Big-ticket items like cars and furniture (anything that needs financed) can raise your debt-to-income ratio and raise red flags for mortgage lenders
While cutting back on the holidays may be disappointing this year, just think about how great it will be to host Christmas or Hanukkah at your new house next year! There’s no place like home for the holidays!