Want to buy a house this year? It’s a big step, requiring planning ahead and plenty of financial preparation. Therefore, here are 7 New Year’s resolutions that can prepare you to find that perfect home and make your move! The New Year is often a time to hit the reset button and start fresh. It is an excellent opportunity to start reaching towards an ongoing goal you have. If buying a home has been an ongoing goal, use the New Year to begin taking steps to become a homeowner. Hence, the path to affordable homeownership is possible! We have provided many useful tips to help you get there:
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TRACK YOUR SPENDING BEFORE YOU BUY A HOUSE
The first step to buy a house is to prepare financially. Track your spending to understand where and how you spend your money. This enables you to find poor spending habits. For instance, here are some helpful ways to check your expenses:
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Create a spreadsheet and manually input every purchase.
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Use a money-monitoring app
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Check and recheck your credit card use.
Once you have tracked your spending for at least one month, you can decide where you need to cut costs. Similarly, how much money you can save every month.
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BUILD A SOLID CREDIT HISTORY
One of the first things a lender will look at is your credit history. Lenders prefer borrowers who have a history of paying off credit cards. Moreover, they pay other debts on time. Hence, it signals that you’re a responsible borrower and less of a risk.
If you don’t have credit, securing a home loan is significantly more challenging and time-consuming. Yet, not impossible. Records of paying rent and utilities on time can help show a potential lender that you have a history of managing monthly payments.
Your credit score is a significant factor that lenders use to decide your eligibility to buy a house. The better your credit score, the better your chances will be to secure a home loan.
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AVOID BIG PURCHASES BEFORE YOU BUY A HOUSE
Avoid taking on large amounts of debt whether it’s buying a car or getting new furniture before you buy a house, even if you’re already pre-approved. Your debt-to-income ratio, or how much money you make compared to how much debt you have, can significantly affect how much money a lender is willing to give you. Keeping debts to a minimum will make the home-buying process go a lot more smoothly. Avoid taking on large amounts of debt , whether it’s buying a car or planning a large vacation, before buying a house. This is advisable even if you’re already pre approved.
Just like proofreading your résumé before you apply for a job, cleaning up your financial resume can help improve your chances of buying a home.
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ORGANIZE YOUR FINANCES
You’ll need a thorough understanding of your income and expenses to embark on the home-buying process. This is partly because you’ll likely need to get a pre approval for a loan by a lender before you can go house shopping. A approval letter provides an estimate on how much you can spend. Before you contact a lender, you’ll need to put together a list of financial information, including:
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Your monthly income
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The sum of your total monthly debt payments (auto loans, student loans, and credit card minimum payments)
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Your credit score and any credit issues in the past few years
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How much cash you can put down
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FIND A REAL ESTATE AGENT
The best real estate agent is an experienced professional who listens to your concerns and knows their market. That person might not necessarily work at the largest brokerage, close the most transactions, or make the most money.
There’s no shortage of real estate agents struggling for the job via online ads, postcards and yard signs. But with so many professionals to choose from, finding the right one can feel overwhelming. Follow these tips on how to find a real estate agent to make sure you hire the perfect pro.
- Talk to a lender before you hire a real estate agent.
- Get referrals from your network.
- Research potential candidates.
- Interview at least three real estate agents.
- Request references — and check them.
- Go with your gut.
- Take a close look at your contract.
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DON’T SWITCH JOBS
Employment history and income are two of the biggest factors lenders look at when evaluating a mortgage application. A new job is a good career move. However, if you plan to buy a home in the new year, know that job hopping can be a red flag to some underwriters , especially if you’re moving to a different industry.
A steady job history and few or no gaps in employment over the past two years are ideal. As it helps lenders more easily forecast your future income.
If you do get a new job while home shopping, let your lender know as soon as possible. It doesn’t mean you won’t qualify for a mortgage , just be ready to show extra documentation.
If you’re moving from a commissioned or hourly job to one that’s salaried with equal or more compensation, it may help your application. Lenders often prefer borrowers to have steady, predictable paychecks.
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LIMIT MONTHLY SUBSCRIPTIONS
Monthly subscription services are certainly convenient, but they can add. Even if you pay off your credit card every month, lenders can strike you for high credit use if your credit report is pulled mid cycle.
If you’re thinking of buying a home this year, consider keeping your monthly subscription services to a minimum.
Take advantage of online tools and resources, which can help you decide how much home you can afford.
In conclusion, we have shared some useful tips for you in this article. These will help you buy a new house for you this year.
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