NEWS RELEASE 2008
ABA Media Contact: Marquita Powell  

(202) 663-5418
E-mail: mpowell@aba.com

ABA CITES MONEY BASICS AS THE FOUNDATION FOR HOMEOWNERSHIP

Tips for Consumers Preparing to Purchase a Home

WASHINGTON, May 30—As June marks National Homeownership Month, the American Bankers Association Education Foundation recommends that consumers focus on mastering basic financial principles as they prepare to buy a home.

 

“Consumers should know the basics before taking on a mortgage,” explains Laura Fisher, director of the ABA Education Foundation.  “Make sure you have experience with budgeting, especially goal-focused saving, before you buy.  If you don’t know how to save, then you’re not ready to borrow.”

 

The ABA Education Foundation and ABA member banks have identified the following personal finance basics that consumers can use as they prepare for homeownership:

Saving

Saving is essential when buying a home in the current market. Most lenders will require a down payment, which demonstrates your ability to manage money.  Banks are committed to helping consumers save. Many offer savings plans that automatically transfer funds from checking to a savings account, mutual fund or other savings plan.

Managing Credit

In recent months lenders have put more emphasis on credit, requiring consumers to have a credit score of at least 720 to qualify for the best rates.  To improve their credit scores, consumers should pay all bills on time, avoid closing old or paid off accounts which can lower credit scores, pay-down debt, check credit reports annually and talk to creditors when in trouble.

 

Lowering Debt

Debt constitutes 30 percent of your credit score, and the less you owe the better.  ABA recommends that consumers pay more than the minimum due and always pay on time. Pay off debt with higher interest rates first, transfer high-rate balances to credit cards with lower interest rates, and limit long-term debt to purchases that will appreciate in value, such as a home.

 

Budgeting

Developing a financial plan helps to keep your finances in order.  It’s important to avoid overextending finances and reaching credit limits or “maxing out” credit cards.  Budgeting allows you to pay down debt, save and meet other financial goals.

 

Ready to buy? Consult with your local banker or get the facts from our National Homeownership Month page at http://www.aba.com/ABAEF/NationalHomeownershipMonth.htm.

 

The ABA Education Foundation, a nonprofit subsidiary of the American Bankers Association, is committed to developing and providing education programs that lead to financial literacy.  For more than 80 years, we have supported the banking industry’s efforts to teach personal finance skills in schools and communities across the country.  The programs we provide are specifically and uniquely created for young children, teenagers and adults to provide them with the skills they need to budget, save, and manage credit.  For more information, visit http://www.abaef.com  or call 1-800-BANKERS.

 

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