New Year’s goals and resolutions do not only apply to your lifestyle. Resolutions can go beyond eating healthier, exercising more, or reading one more book every month. In fact, many of your resolutions and goals this year are probably related to money or your budget. Since a home is likely one of the biggest investments you’ll make in your lifetime, it is important to start thinking about them as you set goals to purchase a home in the near future.
At least 8.3 million first-time homebuyers will enter the market by 2022, according to a report from the credit bureau TransUnion. However, between a lack of new development in the starter-home sector, and Boomers opting to stay put in their houses, available inventory in the United States is expected to hit a historic low.
That is why if you are planning on purchasing a home in 2022 you should use this guide to get your process started as soon as possible.
Start saving for your down payment
Saving for your down payment is by far the most difficult and time consuming part of the home-buying process. If you think about it, the average home in the United States is around $350,000 which means that you will have to put down roughly $70,000 to $100,000 (at least 20% down) to avoid taking out a high-ratio mortgage. That is why it is important to start thinking about how you will save that money.
Check your credit score
Checking your credit score is incredibly important because your mortgage lender will be doing the same thing and you want the reviews to be positive when you meet for the first time. A credit score rates your credit-worthiness between a score of 300 and 900. The higher your credit score is, the better off you will be when you meet with your lender. However, lenders don’t just use your credit rating to assess your credibility, they use other factors such as your debt-to-income ratio to determine your mortgage eligibility. That is why it is important to make sure to check that both your credit score and external factors are satisfactory. If you find yourself in the lower side of a credit score because of one or two times you forgot to pay off your phone bill, you must improve your credit score before you start the pre-qualification process.
Get pre-approved for a mortgage
You’ll want to take advantage of the current low interest-rate environment while you can since interest rates are slowly increasing. The sooner you can get pre-approved the better of you will be in your home-buying process. Why sooner rather than later? Getting pre-approved for a mortgage will lock in your rate for 90 days. This does not mean that you have to purchase in this time frame, nor are you committed to that particular lender, rather it is a written confirmation of your lending amount and the promised rate, allowing you to shop with confidence within your budget.
Create your wishlist
Do you rely on public transit? Is an active nightlife important to you? Do you need a daycare or school close to home? How far/close do you want to be from your family? What about groceries? Do you want a backyard? All of these preferences need to be thoroughly examined before you start your in-person shopping experience. Many homebuyers skip over these important questions before they go home shopping which can cause burn-out. No one wants to walk around aimlessly looking for homes every single weekend (even if at first you think you do). That is why it is important to cultivate a realistic wish list before you home shop so that you can assess what is most important in your home-purchasing process.
Shop until you drop
Now that you have your credit score checked, your pre-approval in process, your budget in place and your wishlist created, it is time to hit the streets and explore the different neighborhoods and amenities. Especially in Philadelphia, there are a wide range of neighborhoods to choose from that fit any unique lifestyle.
Finally, the last step in the process is to make sure that you have a real estate agent that understands your preferences and has a vast knowledge of the area so that you can have the most streamlined process possible. Often homeowners run into trouble when they have all of the tools in place, but the wrong leaders (aka real estate agent) so make sure you do your research before choosing the perfect real estate agent for you.
Contact Ian Perler Team at firstname.lastname@example.org for all of your real estate needs!