The 5 Steps to Becoming a Homeowner in 2019
Here are five steps you can take to make sure you are well prepared to buy a home this year:
- Check your credit. Credit plays a key role in the loan-approval process, and it also dictates the interest rate that lenders will offer you. Knowing your current credit score, and having an understanding of how you might be able to improve your score, will ensure you’re in the best position possible to buy a home. It’s also important to note that you should not open any new credit accounts or loans, and that you should refrain from doing anything that will impact your credit in a negative way.
- Understand your down payment options. A common misconception, especially among first-time-homebuyers, is that you’re required to put 20% down on a home to be able to purchase it. In reality, you can get conventional financing for as little as 3%, 5%, or 10% down. Of course, a 20% down payment ensures that you won’t be required to pay mortgage insurance as part of your monthly payment. But with different down payment options being available, your goals of homeownership may be closer than you think.
- Establish a plan to fund your down payment. Many of my clients have been able to utilize such options as borrowing from their 401(k) plan without penalty or receiving gift funds from a family member. For others, down payment funds may also come from the sale of your current home, in which case I would suggest we sit down together to discuss strategy and develop an order of operations. Whatever the case, I think it’s important to recognize that you do have options for your down payment beyond simply saving up the cash.
- Meet with a lender and get pre-approved. This is often the most intimidating step of the process, but it’s definitely important to do up front. Having a relationship with a lender you trust, and establishing a budget for your purchase, will not only ensure that you’re shopping for homes within your price point, but it will also put you in a position to be able to write an offer once the right home comes along. To submit a viable offer on a home, it must be accompanied by a pre-approval letter, so you don’t want to find yourself scrambling to try to get this done at the last minute.
- Meet with a Realtor and have a buyer consultation. Establishing a relationship with someone you trust as your Real Estate Advisor is the most important step of the process. Your Realtor should be able to provide you with market data and education, and they should be knowledgeable about neighborhoods, trends, and home values—including how each of these things relate to your specific goals for a home purchase. Experience does matter, and it could make all the difference in accomplishing your Real Estate goals.
It’s never too early to begin establishing your team of experts, so if you or someone you know is looking to buy or sell a home, or if you have any questions, please don’t hesitate to reach out. We look forward to hearing from you!