It’s that time of year again! Everyone is making a list of their New Year’s resolutions. The typical New Year’s resolutions are to get in shape, pick up a new hobby, see family more, etc. However, after the holiday season, you may be considering buying your first home. Before talking to a real estate agent, you have to do some preparation on your part.
If this is the year that you buy your first home, here are some New Year’s resolutions that will prepare you for the journey.
Save for a Down Payment
Saving for a down payment may be the hardest New Year’s resolution to keep when trying to buy your first home. This means rearranging expenses and finding money that may be hiding in plain sight.
Depending on the mortgage loan you would like to receive, your down payment can vary. If you are applying for an FHA loan, you may be required to only make a 3.5% down payment, while a conventional loan can be a 20% down payment. It’s good to do your research and see which loans you qualify for so you can plan how to save for your down payment.
Improve Your Credit
Many people don’t think about their credit score unless they are buying a large purchase like a car or a house. Make it your New Year’s resolution to check your credit score and find out how to improve it. Your credit score plays a large part in the buying a home because your mortgage interest rate is partially determined by your credit.
If your credit isn’t where you would like it to be, there are a few ways to fix it. One way to fix it is to start paying off your credit cards and avoid making large purchases. There are companies out there that will help you fix your credit and guide you through the process as well.
Talk to Lenders
Before speaking to a real estate agent, talk to a few different lenders to get preapproved for a mortgage. Many first time home buyers will skip this step until they find a house that they would like to buy. However, it is important to get preapproved before even looking for a home because it will help you determine how much you can afford.
It’s also important to shop around for lenders. Some offer special programs or interest rates that another does not. Take your time and ask for recommendations from friends or real estate professionals.
Set a Budget and Stick to It
We already spoke about saving for a down payment, but building up your savings account should also be one of your New Year’s resolutions. When you buy a home, you are paying for more than just a mortgage each month. You will also have to pay property tax, maintenance, utilities, and homeowners insurance. These hidden expenses can really add up, so make sure you can cover them when determining how much you can afford to spend on a home.
Knowledge is power. When you buy your first home, you are stepping into a whole new world of real estate lingo, restrictions, and loopholes. So, before you decide to go to an open house, educate yourself about the home buying process. Learn real estate terms, what happens at a settlement, and what is stated in the Agreement of Sale. It’s best to sit down and talk to a real estate professional that can answer your questions and guide you through this process.
Make Your New Year’s Resolutions
It’s the beginning of a new year, which means it’s time to make your New Year’s resolutions. If your goal this year is to prepare yourself to buy your first home, there are a few things to do before touring a home on the market. First, figure out a way to save for a down payment and build up your savings. You’ll want to improve your credit score, which can take some time, so you get a low interest rate. Lastly, educate yourself by talking to real estate professionals and lenders so you know what is happening and can make good decisions when it comes to buying your first home.