One of the most common rituals for the new year is the habit of setting goals. Often these goals revolve around personal improvement, or finding ways to make a better life in the coming year. For those who have been renting, now is the perfect time to set a goal for achieving home ownership in 2021. After a difficult year in 2020, here are some of the steps you can take to achieve that goal in the new year.
Step 1: Set the goal
Okay, this one might seem a little too obvious, but simply having the goal—preferably in writing so you’re a little more committed—is often the first step to achieving home ownership. It makes the far-off dream of having your own home feel a little more like a reality. Bonus points if you set a specific date (or a range like “fall 2021” or “spring 2022”) for your goal.
Step 2: Get your finances in order
The hardest part about owning a home is making sure that your financial life is in order. Some of the most important steps you can take to help put you in a position to get a mortgage loan include:
- Paying down or paying off debt
- Putting money away in a savings account to pay for the down payment
- Paying all your current bills on time to keep your credit score high
- Avoiding taking on unnecessary new debt, such as new credit cards or new car loans
- Create a budget to keep your spending on track and your home ownership goals in reach
Step 3: Understand what you can afford to borrow
Before you apply for a mortgage or start shopping for a new home, figure out how much you can afford to borrow based on how much you want to pay each month. You can use online mortgage calculators and either put in the price of the house to see the monthly payment, or put in a specific monthly payment to see what size loan would have that payment. When setting your house payment budget, don’t forget that your monthly payments will include property taxes and homeowners insurance in addition to the principal and interest on the loan.
Step 4: Talk to a mortgage lender about available loans
Another important step toward owning a home is figuring out what type of home loan you will get. There are several options available, depending on your income, credit score, where you live, and whether you qualify for things like the VA loans (for active duty or retired military). Knowing your options can help you pinpoint how much money you need for a down payment, and what credit score you need to get approved.
If owning a home is on your wish list, make it more of a reality by setting specific goals this New Year to get there. Talk to Integrity First Lending to find out more about home loans available and how you can achieve your dream.