If your looking to buy a home in the next 12-24 months, you will need to assess you financial situation and get everything in order. The following are some tips or guidelines for strengthening your financial situation.

• Establish a good credit history by making your payments by the due date. Many people don’t realize that even paying your utility bills late will damage your credit rating. Pay all your bills on time and try to pay off your entire balance each month.

• Get control of your expenses. Even little expenses like daily cups of coffee or going to lunch instead of bringing one to work add up. $5 per day saved comes to only $25 per week but comes to over $1,200 of annual savings. Try writing down everything you spend for one month and it will give you some ideas of where you can start to save. Maybe even consider purchasing a personal finance software, like Quicken or Microsoft Money.

• Reduce your debt. Lenders look for a total debt load of no more than 36% of your total income. Paying down your installment debt such as car loans, student loans and revolving balances on credit cards and greatly increase your buying power. Lowering your total debt may also make you feel more comfortable taking on a mortgage payment that may be slightly higher than what you are paying for rent or higher than your current home.

• Start saving now! Create a house or down payment fund. Don’t just put away what you have leftover after each months spending. Figure out what you can safely save each month and open up a special account and have the money automatically sent to that account each month. Look at it as forced savings. You can still buy a house for as little as 3.5% down.

• You may want to try to increase your income, at least temporally, by getting a second part-time job. The extra money you make might give you the additional amount that you need to fund your house fund. Taking away some of you idle time might also reduce you expenditures.

• Not sure what to do next? Either contact me for a FREE no obligation personal consultation or contact a mortgage loan officer. If you don’t know a loan officer, call Randall Fowlkes at (630) 399-9291 or check out his web site, www.randallfowlkes.com, that is filled with other financial advice and information.

Understand how your credit score is determined

Many factors influence your credit score. The most important factor that determines your credit score is if you pay your bills on time. If you pay late or have had something go to collection, the history will show up in your credit report. Other factors that have an impact on your score are: What is your outstanding debt? How long is your credit history? Have you applied for new credit recently? How many and what types of credit accounts do you have. CLICK HERE for a FREE publication on credit scoring from the Federal Trade Commission.

Pay your bills on time

If you are having trouble paying your bills on time, consider an online payment service. Most banks, I use Citibank and find it works out great, have online checking and online bill payment services. Once established, you can arrange to have your bank make your payments for you. You can even schedule to have a payment made at a point in the future which allows you to keep your money in the bank until that time but keeps you from forgetting to make your payment. You can also see your current balance to avoid costly overdraft fees when making payments.

Get a copy of your credit report to make sure the information is correct

Under federal law, you can get a free report from each of the 3 national credit reporting companies every 12 months. CLICK HERE for a free copy of your credit report. You can also call, 877-322-8228. This will not affect your credit score. Once you receive your credit report, make sure that all of your credit is accurate. If something is there that shouldn’t be, contact the creditor directly or you may also contact the credit reporting agency. Consider closing out credit cards that are no longer used.  CLICK HERE for a FREE report from the Federal Trade Commission on How to dispute credit report errors.