2020 is in the books! Hallelujah!!! Even with all of the challenges brought in 2020, it was a banner year for real estate and most experts predict the same for 2021.
Could 2021 be the year for a new home? Here are some quick New Year’s Resolutions to help you buy a new home in 2021.
Resolution for #1: Boost Your Savings
Saving for a down payment is usually the most important part of the home buying process. Start the new year off right with a resolution to jump-start your savings and start putting away more for your down payment on your first home? While you may not be able to save enough for the traditional 20% down payment in a year, there are additional mortgage options that don’t require that amount. In addition, most lenders like to see that you have at least two months of reserves set aside. That means that you must have sufficient funds left over, after your down payment, to cover your first two months of mortgage payments.
Resolution #2: Avoid Large Purchases
As you pay off any holiday debt you may have accumulated, you also want to avoid making any large purchases of your own in the coming months. As tempting as it may be to take advantage of after Christmas and Super Bowl sales, keep your credit card in your wallet for the time being.
Resolution #3: Eliminate Unnecessary Spending
This goes hand-in-hand with avoiding large purchases. Scrutinize your budget for any unnecessary spending. Ditch the daily Starbucks. Have a gym membership, but haven’t been in a while? Get rid of it. Overlapping movie services like Netflix, Disney+ or HBO? Maybe get rid of those two. Really take a look at where you spend your money each month and look for ways to pocket the savings.
Resolution #4: Pay Down Your Debt
Your debt-to-income ratio is an important factor for lenders. To help you achieve a favorable rate, focus on paying down your existing debt as much as possible. This new year commit to paying more toward credit card debt, student loans, medical debt, and other debt streams. With fewer dollars owed, you will be in a better position to afford a mortgage once you buy a home!
Resolution #5: Check Your Credit
Your credit score can have a significant impact on your ability to buy a home. A low credit score can negatively affect how much money a lender is willing to loan you, as well as your interest rate.
Just a few percentage points differences in an interest rate can cost you thousands over the life of a loan. Monitor your credit closely, especially for fraudulent activity, to prevent any surprises that could delay the loan application process.
If you’re unsure of your credit score, many financial websites offer credit score monitoring, or you can get a full credit report once a year.
Resolution #6: Avoid the Job Hop
Many people make job resolutions each year and seek out new opportunities or careers. If you are serious about finding a house in 2021, you might want to consider put those career aspirations on hold for the time being. Employment history and income are two of the biggest factors lenders look at when evaluating a mortgage application. 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.
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.
Resolution #7: Start Building Your Home Purchase Team
Buying a home on your own is no easy task, which is why most home buyers opt to utilize the talents of many professionals along the way. The new year is the perfect time to start thinking about building the home buying dream team that can help you find your home and pay for it too!
Your team should include an experienced real estate agent that can guide you through the process and a licensed loan officer that can assist you with all of the intricacies of the mortgage process. Your real estate agent can also assist you with home inspectors, general contractors and a real estate attorney that can assist with repair negotiations and with your home closing. Also, use a buyers agent for new construction.
If you are planning to buy a home in 2021, now is the time to commit to your home purchase! With a few simple resolutions, you could be living in your dream home this year!
We hope you have a very happy and prosperous New Year!
Other Sources from Our Blog
Our Year in Review for 2020: Link
What Does 2021 Have in Store for Home Values?: Link
About Log Pond Realty
Home is where your story begins. Home is where hopes and dreams are born, memories are made, and lives are lived. We would love the opportunity to assist you in writing your new story.
We service the Triangle region of North Carolina including Raleigh, Cary, Apex, Holly Springs, Morrisville, Fuquay-Varina, Durham, Chapel Hill, Wake Forest, and Garner.
Contact us 919.589.3576 | firstname.lastname@example.org