As each new year rolls around, we all have our resolutions planned out. If 2022 is the year you aspire to be a homeowner, start preparing today. Homeownership is an amazing accomplishment, but it does require planning & goal setting. But, you are not alone in this process. A realtor can be a huge asset in the planning stage. Start tackling this to-do list so you can be in a home of your own this year!
Pinpoint your motivations. Don’t skip this preliminary step when setting your homeownership goals. Identify your reasons for wanting to purchase a home this year. Make sure you are emotionally and financially ready. You want to avoid making a rash decision or being “house poor”, meaning all your income goes to your mortgage with little left for other expenses. Owning a home has more permanence than renting does. Although you can sell at any time, there is more effort & money involved.
Be aware of your finances. So many things play into your purchasing power. Credit, debt, income, assets, and liabilities all play a role in determining your budget. You probably know you need a decent credit score and some savings. But what else should you prepare for? First, you will want to have savings for a down payment. Lenders no longer require 20% down. Depending on your situation and loan type, you can put anywhere from 3 – 20 % down. You should also know your credit score. If there is room for improvement, work on raising your score. Other things to consider: having stable income history (no recent job changes), your debt to income ratio and savings for closing costs. Closing costs include things like attorney fees, title fees, origination fees, appraisal, HOA fees and inspections. It’s best to be prepared for all the financial commitments of homeownership. Going in prepared gives you more purchasing power.
Decide where you want to be. This may seem like a no-brainer, but it is an important step to spend time on. Think about distance to work, friends & family, gym, school, and anything else that is part of your daily routine. Take into consideration the lifestyle you want which includes things like nearby traffic, outdoor spaces, local businesses, nightlife, shops, amenities & more. Drive by those areas at different times to make sure you are okay with the traffic patterns and flow. By identifying a few neighborhoods or areas that you love, you can get an idea of what homes cost there & what to start working towards.
Speak with a realtor. Connect with an agent on our team at any time in this process. Whether you are ready to go see homes or are still saving up, our agents can help you establish a plan and set you up with a drip of homes that meet your criteria. This allows you to be aware of what the market looks like in the specific neighborhoods you are interested in. Ask your realtor to serve as an accountability partner if you are still working through these steps; they will gladly check in periodically with you! Your realtor will also help you devise a strategy that works for you in your home search & offers.
Speak with a lender. It’s a great asset to speak with a lender early in the home buying process. This will give you an idea of where you stand financially from a lender’s perspective. We recommend asking for an outline of what you would be approved for contingent on your credit and income being verified. The lender will also let you know what steps you can take to better your standing within the time frame you plan to purchase. Even if you are 9 months out, it’s not too early to see where you are at. Our team would be happy to refer you to a lender, just ask us!
Redefine your needs based on your budget. In the current market, buyers who are flexible are winning. After speaking with a lender and assessing your finances, you should have your budget locked down. Revisit your list of needs & wants. Does your list align with your budget and the current market conditions? What items are you able to negotiate on? What items are a necessity? Make sure to communicate these items with your realtor so they can modify your search.
Start your home search. You’ve done all the prep work, so now it’s time to go house shopping. With a great realtor and your pre-approval letter, you’ll be ready to make an offer!