Is your 2020 New Year’s resolution to buy a home? Congratulations! Buying a home is a major lifetime achievement. Resolving to make it happen brings you even closer to your dream of home ownership. If you want to put yourself on the path to success, then there are some things you can do to make sure you’re ready to buy when the time comes. Here’s what you need to do to prepare to buy a home in 2020.
Order your credit report
One of the most important things you should do when you’re preparing to buy a home is to order a copy of your credit report. Your ability to qualify for a mortgage is dependent upon what your credit report reveals. The better your report, the better rate you will get on your mortgage. Unfortunately, many credit reports contain errors. If you find an error on your report, you need to take the appropriate steps to have it removed. It can take up to a few months to have your credit report fixed, so give yourself plenty of time.
Pay down debt
Once you’ve ordered your credit report, you’ll have a clearer picture of exactly how much debt you already have. If you can pay off some of your debt before applying for a mortgage, you can improve your credit score. This will help you get better terms on your loan. Try to pay off credit cards if possible, or at least lower the balance you are carrying. Aim for your debt to be 50 percent or less of your available credit. And don’t take out any new lines of credit now, including auto loans.
Are you ready to put a down payment on a house? Depending on the type of loan you secure, you may be on the hook for up to 20 percent of the purchase price. The more you have saved for a down payment, the more home you can afford. Now is the time to start tightening the purse strings. Even small changes like making your coffee at home in the morning instead of buying it on the way to work can add up over time.
Determine your budget
Now that you’ve got a clearer picture of your financial health it’s time to determine your budget. One of the best pieces of advice we can give you is to stay within your budget – only buy a home you can reasonably afford. There is nothing worse than having to stretch to make your mortgage payment each month. To find out how much house you can afford, use one of the many online calculators that will give you an estimate.
Begin your search
Once you’ve determined how much house you can afford, it’s time to begin your search. Start by researching neighborhoods and looking at online listings in those communities. This will give you an idea of where you can afford to buy a home and the kinds of amenities that are nearby. Make a list of all the things you are looking for in a home and be clear about what you really need verses what you’d like to have.