Buying a home is a ‘purchase of a lifetime.’ It’s a major financial step that requires a lot of planning and preparation. If 2021 is the year you’ll put an end to your rental days and find your dream home, here are things you can realistically start doing now to finally become a homeowner within next year.
1. Check your credit score and take steps to improve it.
Your credit score and credit history play a major role in whether or not you will get a mortgage and could affect the interest rate lenders can offer you. Start monitoring your credit report by getting free copies from national credit reporting agencies. Then, work on improving your credit profile by paying your bills on time and keeping your credit card balances as low as possible.
2. Research first-time home buyer grants or assistance programs.
Do your preliminary research and see if you qualify for any first-time home buyer programs being offered by your city or state, where you can get down payment and closing cost assistance, or even special loan programs with lower interest rates.
3. Shop for a lender and get pre-approved.
Once you’ve taken care of your credit but before you officially go house-hunting, shop around with various lenders to compare their offers and find the best deal available.
Likewise, getting pre-approved will help you know how much you can borrow so you will only shop for what you can afford. It will also show sellers and agents that you’re a serious buyer.
4. Find a local and knowledgeable real estate agent.
Even if you’re still months away from entering the housing market, start looking for a real estate professional who will guide you through the complicated home buying process. Your agent will provide you crucial information on homes and neighborhoods, answer any questions you have about the process, and will look out for your best interest so you’ll be satisfied with your biggest investment. Start getting recommendations from family and friends, read online reviews, and interview several agents before making the final decision.
5. Set up a new budget and live on it to anticipate the costs of owning a home.
Create a new budget and practice living on it. Make sure you add in the costs of owning a home, because aside from your monthly mortgage payments, there’s utility bills, repair and maintenance costs, property taxes, homeowners insurance, etc. With these in mind, you will have a good idea of how much you can comfortably afford and you’ll avoid straining your budget once you’ve become a homeowner.