Happy New Year! If buying your first home is at the top of your resolution list, now is the right time to start planning and working toward your dream of homeownership. It’s not something that will happen overnight, but the rewards far outweigh the efforts!
For the first time in a long time, existing home sales are trending up for first-time homebuyers, who made up 31 percent of total existing home purchases in November 2014.
As the market enjoys a small uptick in first-time buyers, here’s what you can do to ensure you reach your goal of owning a home in the coming year:
- Commit. Just because rates are low doesn’t mean purchasing a home is right for everyone. Before buying a home, you must determine if the timing is right for you. A home means if you get a dream job offer elsewhere, you may have financial ties that have to be handled, and it may take a while. According to a recent study by Realtor.org, buyers expect to live in their home for 12 years after buying.
- Give yourself small goals. Break your big goal of homeownership up into smaller, more manageable pieces, each with their own deadlines. For example, paying down debt could take a few weeks or months, while saving for a down payment could take a few months or more.
- Go over your credit report with a fine-tooth comb. Knowing your numbers is a great start, but take a closer look to see if there are any errors or discrepancies that could be costing you valuable points off your score. Be sure to do this at least three months prior to applying for a home loan to ensure any errors are corrected before lenders start peeking into your credit history. You’ll want a score of at least 740 to qualify for the best rates.
- Save, save, save. Put all you can toward a down payment in order to avoid having to pay private mortgage insurance (PMI) on top of your mortgage. Apply any income tax refund you receive this year to your down-payment fund, and set up an automatic deposit from your paycheck straight into your down-payment savings account so you aren’t tempted to spend the funds on something else. If seeing the savings is too tempting, open a separate savings account at a local bank or credit union and skip the ATM card, making it as inconvenient as possible to pull money out of that account.
- Decide where you want to live. Many cities have neighborhoods that can vary drastically in price, personality and amenities. Think about your lifestyle and which neighborhood best suits how you feel about commuting, nightlife, as well as proximity to beaches or other attractions.
- Do your homework. Once your credit report has been reviewed and any errors rectified, get pre-approved for a mortgage so you’ll know exactly what you have to work with. Be sure to research comparable homes in your desired locations and create a mock budget to ensure you can make your monthly mortgage payments.
- Check your progress regularly. Set aside an hour every two weeks or so to ensure you are on track for your goals. Mint.com allows you to link all of your financial accounts and monitor where the money goes. You can also set goals and track your progress through the dashboard to see where you need to make adjustments along the way.
- Finish strong. Once you’ve saved close to what you need for a down payment and are pre-approved for a home loan, be patient in your search. Realtor.org reports that it takes an average of 10 weeks to search, and buyers see an average of 10 homes before finding the right one.
To learn more about affordable new homes for first-time homebuyers, visit nocatee.com or call 1-800-NOCATEE.