New Year’s resolutions cannot only be applied to wellness. They can be used beyond promises to cut back on bad habits, eat better and read at least one book per month. The annual list of goals can be narrowed down to many useful topics – like, for example, buying a house. Preparation is key for this endeavor, as the market is not going to be easy for buyers to navigate in 2020. Below mentioned are 5 new year resolutions which can help you to become a home owner in the coming year.
- Organize your finances:
Home-buying process is not easy. It requires a thorough understanding of your expenses and income. This is partially because a lender has to preapprove you for a loan before you can go house shopping. A preapproval letter provides an estimate on how much you can spend. “Before strolling through an open house or making appointments to see apartments with your agent, you’ll want to speak with a lender and get a preapproval letter in order to know what you can afford,” explains Becki Danchik, an agent with Warburg Realty. She further adds, you’ll need to put together a list of financial information before contacting a lender, including:
- The sum of your total monthly debt payments (auto loans, student loans, and credit card minimum payments)
- Your monthly income
- How much cash you can put down?
- Your credit score and any credit issues in the past few years.
- Limit monthly subscription services:
Monthly subscription services are albeit convenient, but they can add up. Even if you pay off your credit card every month, you could be linked with high credit utilization if your credit report is pulled mid-cycle.
If you’re thinking of buying a home, it is advisable to keep your monthly subscription services to a minimum.
- Don’t hesitate:
“If a buyer sees something perfect, chances are other buyers think it is perfect too,” warns Lisa Camilleri, of Warburg. “Don’t hesitate in making an offer if you think there is a chance you could lose a particular property that you have fallen in love with.”
- Find a real estate agent:
“I recommend that you secure a real estate agent as soon as it even crosses your mind that you want to buy a home,” says Warburg’s Rebecca Blacker. Though some agents ask for a preapproval letter from buyers to receive a mortgage before their help, Blacker likes to meet with potential clients early on so she can help as much as possible. “Purchasing a home is most likely the biggest investment you will ever make and it is so important to have a real estate adviser from day one, walking you through and educating you on the buying process from A to Z,” she says.
“I will choose my Realtor wisely,” is the resolution recommended by Nancy Strong, a Douglas Elliman agent in Westchester. Believe what the agent tells you after finding a right fit for you, she adds. For example, “take your Realtors’ recommendations on attorneys, mortgage professionals and inspectors,” she says. “They have gone through this process more than you, your family members, your friends or your service providers.”
- Avoid job hopping:
Two of the biggest factor’s lenders look at when evaluating a mortgage application are employment history and income. A new job may be a good career move, but if you plan to buy a home in the new year, know that job hopping can be a red flag to some underwriters — especially if you’re moving to a different industry.
Few or no gaps in employment over the past two years and a steady job history are ideal, as it helps lenders more easily forecast your future income.
If you do get a new job while home shopping, let your lender know as soon as possible. It doesn’t mean you won’t qualify for a mortgage — just be prepared to show extra documentation.