It’s an annual tradition—as one year winds down, we look toward the horizon of the next year and anticipate all the exciting developments that will dawn with it. And if you’re planning to buy a home, no doubt it’s on the short list for upcoming 2019 highlights. After all, a successful home purchase takes long-term saving, planning and determination. In other words, it’s a big deal. To help achieve your goal of homeownership in 2019, let’s review some important steps to buy a home.
Establish a down payment
If you plan on buying next year, chances are you already have an idea of what down payment you’ll be able to put toward a house, but let’s do some math. Take some time to review your finances and establish how much you’d be able to contribute from your personal savings. Then factor in how much you expect in gift funds from family members (or possibly even close friends and employers).
Once that’s totaled, see if there’s any room to save even more toward a down payment—without dipping into other important nest eggs, of course. Every little bit will help draw down the amount you’ll owe on your mortgage each month.
P.S. Also make sure to set aside some of that money for closing costs!
Assess your cash flow
This is to estimate how much you’ll be able to put toward monthly payments on mortgage principal, interest, taxes and insurance (known as PITI). Factor in all of your income, expenditures and savings goals to estimate how much you’ve got left over to put toward a monthly PITI payment.
Double check your credit
A good credit score will help ensure you get you the lowest market interest rate on a home loan. Check that there aren’t any errors on your credit report—like false accounts or negative flags that should have been removed—at www.annualcreditreport.com. If there are, you’ll want to challenge those so that they don’t artificially suppress your credit score. After that, see what you can to help maintain or improve your score.
Figure out your target price
From here, you’re ready to take all that financial legwork and estimate how much home you can afford. Once you have identified what your maximum home price is, you’ll save yourself valuable time by not looking at options outside of that range. A mortgage calculator is a really handy tool for this.
Once you’ve made your own estimation on what you can afford, pre-qualify for a mortgage to confirm that lenders agree with your estimates. This will also give you a chance to review the different types of home loan options you might qualify for with a mortgage professional.
Look for real estate agents
Phew. Now that you’ve got all that number-crunching behind you, it’s almost time to hit the road (or internet) and start shopping! But first, you’ll want a sidekick, and by that we mean a good local real estate agent. This should be a reputable professional with a solid working knowledge of the areas you’re interested in moving to. To get started, check out 4 Things to Look for in a Real Estate Agent.
Prep current home for move
Once you’ve got a real estate agent and you’re ready to rev up the home search, it’s also a good time to start planning out your move. Do you currently own a home that you need to sell? Or will you be moving from an apartment or other rental? And of course you can never do with enough packing tips. The more you can anticipate and plan ahead, the more you’ll enjoy moving day.
We hope you’ve found these steps to buy a home useful, and wish you every success on your 2019 home search! And if you’re interested in buying a new home, check out communities in your area here.