How to Become a Homeowner in 2019
2019 could be YOUR year! If you’ve been quietly dreaming of selling your home and buying your dream one or even becoming a first-time homeowner, it’s time to set your intentions and plan right now in order to be successful in achieving your real estate goals this year.
We know you’re really looking forward to the fun part of actually touring homes and making an offer but… There are 5 key steps you must take first in order to get there.
Are You Seeing Green?
Simply put, having a high credit score will help you secure a loan with the best terms available. Equifax, Experian, and TransUnion are the three major credit agencies and it’s possible your score might vary slightly from all three but it generally will be in the same ballpark range. Many credit card companies provide you with access to at least one of your credit scores so if your card offers that service, it would be an excellent place to start.
If you find that your credit score needs some help, the easiest way to boost it is to pay your bills on time, keep your balances low and don’t open multiple unnecessary lines of credit at once. Let your credit be a catalyst in your homeownership journey and not a hurdle!
Crunch the Numbers
Being realistic about what you can afford in the beginning will save you a lot of trouble down the road. Using a mortgage calculator is helpful but can also be deceiving since most calculators do not account for taxes, insurance, maintenance or even utilities. Chances are your true mortgage payment will be more expensive than what the calculator says it will be. It’s important to be sure to not use the cost of the home as your ONLY baseline for a budget or you will be seriously disappointed and overwhelmed. Always be conservative with your numbers so you don’t have to sacrifice and stress.
Save and Save Some More
This one seems like a no-brainer but when buying a home, you have to consider the costs for the down payment, closing costs, inspections if applicable, insurance and any immediate repairs you are responsible for.
A common misconception keeping people from pursuing their dream of homeownership is the myth that you need to put down the traditional 20%. Options may vary starting at just 3% depending on what type of loan you are planning to use. Additionally, closing costs can run anywhere between 3-5% of the total cost of the home and if you aren’t prepared for them, they can come as a shock.
When you think you have just enough money, save a little more so you have a cushion when you encounter unexpected expenses. Also, big purchases such as new cars, furniture and vacations should all be put on the backburner until you close on your home. Large purchases could drown your savings account and prevent you from securing a loan.
Choose the Right Agent
Do we still have your attention? Good! We love the fun parts of buying a home (showings, picking out furniture, paint colors etc) but we know it isn’t always a perfect experience. There can certainly be some stressful and confusing parts during the process. That’s why it’s always a good idea to work with a real estate agent you trust to get the job done correctly and someone who will work in your best interest. A good agent will stay one step ahead and be able to give you advice about what to expect.
Getting pre-approved is really the first big step in the actual journey of buying a home. It’s a good way to have a competitive advantage with sellers and it will also give you insight about how much the lender thinks you can afford. The lender will require a lot of information from you such as previous W2’s, several months worth of bank statements, investment account information, pay stubs and other tax documents.
It will seem like a never-ending list of requests and SUCH a drag but once you turn all of the information in and you get approved, you’re ready to start seeing homes with your agent!
If you’ve been working on your credit and bulking up your savings account for a while, then 2019 truly is your year to reach your real estate goals. This to-do list of sorts may not be the most glamorous but if you follow these steps, you’ll be on your way to buying your new home in no time.