Making New Year resolutions enables you to be more intentional about your goals. It provides clarity of goals and a clear blueprint of the necessary steps to take to achieve them. Home purchase is a cost-intensive investment that requires extensive preparation. If you’re planning to buy a home in 2024, then there are certain crucial resolutions you need to make from the get-go to assess your readiness and ensure you’re financially prepared to close the purchase.
In this post, we share ten New Year resolutions to consider if you’re planning to buy a home in 2024.
1. Define Your Homeownership Goals
Visualize your homeownership goal and create a list of what you need in the home. What neighborhood do you want? How many bedrooms should the house have? What’s your preferred proximity to work or school?
2. Research the Market
Set aside time to research the market. Identify real estate websites with listings in the neighborhoods you’re interested in and compare home values and amenities available. This gives you a feel of neighborhood suitability to your needs and affordability.
3. Assess Your Finances
Consider consulting a financial professional to assist you in getting a grasp of your finances. They can help you assess your finances and understand how the home purchase will impact your financial health. Generally, they will advise you on the type of home you can afford based on your income, how much you need to put down, and provide smart budgeting tips to help you achieve your goals.
4. Work on Your Credit Score
Your credit score determines your creditworthiness and plays a huge role in securing a mortgage loan with favorable terms. The higher your score, the lower your mortgage interest will be.
If you have a poor rating, make New Year resolutions to improve it. Some of the ways you achieve this include:
- Paying bills on time
- Asking for higher credit limits
- Disputing credit report errors
Also, do a credit clean-up. Check out any debts you may have defaulted in the past and clear them. Usually, credit scores range between 300 and 850, with a rating of 700 being considered good, but you can aim for higher scores.
5. Manage Your Debt
Mortgage lenders determine the loan you can afford based on your existing debts, such as car loans, student loans, credit card debt, etc. Consider accelerating debt payment and review the impact of any loans you may need to acquire during the year on your debt-to-income (DTI) ratio. DTI ratio refers to monthly debt payments divided by gross monthly income. Different lenders have varying DTI limits, but you should aim to keep it as low as possible.
6. Save for a Down Payment
If you haven’t saved for a down payment yet, create a savings plan. You should have at least 20% of the home value set aside for a down payment. The more you put down for the house, the lesser your mortgage installments will be.
Additionally, consider setting up a separate account for the sole purpose of saving for the down payment.
7. Create a Budget
Create a spending plan for the year to save as much as possible to channel toward the home purchase. Purpose to be more mindful of your spending and prepare to make sacrifices. For instance, consider lowering your monthly expenses by looking for grocery deals, cutting down on expensive takeout food, avoiding impulse buying, and slashing unnecessary monthly subscriptions. Also, refrain from making large purchases such as buying a car, new furniture, jewelry, or large appliances.
8. Boost Your Income
Find ways to boost your earnings and increase your disposable income in readiness for the home purchase. For instance, you can start a side hustle, negotiate for a pay raise at work, or work overtime.
9. Get Pre-Approval for a Mortgage
Shop around for lenders and get a pre-approval letter. A pre-approval letter confirms how much mortgage you can afford, allowing you to shop with confidence. It also shows potential sellers that you are prepared for the purchase. Usually, the lender assesses your income, debt, and cash reserves to determine how much you can afford.
10. Hire a Realtor
Finally, the purpose is to find a good realtor to help you with the process. Consider interviewing several agents to find an ideal one. Look for a realtor who understands your needs and whose communication style you like for a good rapport.
Research them widely and ask them questions to evaluate their expertise, especially negotiation skills, and knowledge of the local market conditions.
Breakdown Your Home Ownership Goal and Start the Year Right
If you’re planning to buy a home in 2024, start preparing yourself by creating a solid plan. Remember, the achievement of the goal is largely dependent on the decisions you will make daily, especially about your finances. Add the above ten New Year resolutions to your homeownership plan and commit to them.