The new year is a time for a fresh start and new opportunities. It’s also a great time to set big goals and begin accomplishing them. If buying a house happens to be on your to-do list for 2021, it’s time to dig in and get to work. Let’s discuss a few resolutions that will put you on the right path toward homeownership this year!
1. Work on Your Credit Score
Your credit history is essential when applying for a mortgage. If you don’t have a long credit history or if you need to improve your credit score, it’s time to get laser-focused to give your credit a boost. Good credit can score you a better interest rate and it provides more loan program choices. For example, a credit score in the 700s may be sufficient for a conventional loan and a lower interest rate, but if your score is in the 600s, your options may be more limited depending on your circumstances.
2. Save Every Penny You Can
If you plan to buy a house in the future, saving money now will pay off big in the long run. You will need to have a certain amount of cash on hand for your down payment and closing costs, though the amount needed will ultimately depend on the loan program you choose as some offer low to no down payment options. The more you can stash away, the better. If you have any expenses that can be cut, such as a morning coffee habit, subscription services, dining out, an unused gym membership, etc., putting a stop to these things will add up over time.
It’s worth noting that if you have any debt, it’s important to chip away at that while continuing to save where you can. Your lender will look at your debt-to-income ratio when you apply for a mortgage, so the lower your debt relative to your income, the better your odds of getting approved for a mortgage with great terms.
3. Find a Lender
Begin your home buying process by finding the right lender and you’ll be off to a good start. It’s helpful to get a clear idea of the different mortgage programs available and the true cost of homeownership before you become too invested in your home search. Your lender is a great resource for all things related to home buying and can give you advice on things like improving your credit rating and saving for a down payment. It’s also important to get pre-qualified before you start searching for the perfect home, as homes continue to fly off the market as quickly as they’re listed.
4. Make a Budget (and Stick to It)
When it comes to buying a house, it’s important to purchase a home that fits within your means. You may qualify for a higher home price than what you’re actually comfortable spending – don’t allow yourself to be swayed into buying something too expensive for your budget. Before you even begin the home search process, have your lender crunch the numbers and determine what you’re comfortable spending on a monthly mortgage payment. Your lender can provide you with an estimate that includes the mortgage principal, interest, taxes, and insurance (PITI) that you’ll be responsible for paying each month.
5. Determine What You Want in a Home
Once you’ve laid the groundwork for homebuying, you’ll want to hone in on the specifics you’re seeking in a home. What’s most important to you? For example:
- Do you want to live close to work?
- Do you want to live in a specific school district?
- Do you prefer a single story or a two-story home?
- Do you like new homes or older homes?
- How many bedrooms and bathrooms do you need?
- Do you prefer a small yard or a big yard?
These are just a few considerations you’ll need to make when figuring out what you’re looking for in a home. A real estate agent can help you find homes that meet your requirements within your budget, so the more details you can provide your agent upfront, the smoother your home search will be!
If you’re ready to begin your journey to homeownership in 2021, getting a head start will take you far. At C&F Mortgage, we’re focused on you and your mortgage needs. Get in touch with our local industry experts today to get started.