Buying a home is a common goal for the New Year, but for too many, it’s a goal that won’t be accomplished—simply because they have no idea how to get started. Don’t let the process of saving and searching overwhelm you! Start now with these five things if you want to buy a home in 2020.
1. Take a look at your spending.
Do you know where your money is going? If you want to buy a home, you’d better! In order to properly plan for expenses like a mortgage, repairs and maintenance, utilities, and of course, the down payment, you’ve got to know how much wiggle room you have in your monthly income.
Start simply by looking at where you spend the most. Are there any sneaky sources of income loss, like subscriptions or memberships you don’t use? Are there places you might be able to cut back a bit, by shopping sales, turning off lights, or simply cutting back?
2. Focus on savings.
Once you know where your money is going, it’s a good idea to determine how much you are able to start putting aside, either for your down payment or for an emergency fund. It might be beneficial to create a budget that details what you’re allowed to spend and where, then put the remainder into a savings account.
Tip: If you’ve found some places you can cut back on monthly payments (maybe you canceled a subscription, say), try this little hack. Take the money you used to spend on that expense and put it into your savings account instead. You won’t miss the money, and instead of paying for something you don’t use, it’ll go towards your new home!
3. Research lenders.
It’s a good idea to start talking to lenders well before you actually start searching for homes. Start with banks or credit unions you already have accounts with, but don’t assume these are your only options! Ask around for recommendations for local lenders, brokers, and banks.
Sitting down and speaking with a lender is incredibly beneficial, as it can help you understand which loan options you might qualify for, what specific benefits they might offer, and what your monthly costs might look like.
4. Get preapproved for a loan.
While you’re speaking with these lenders, they’re likely going to ask you about getting preapproved. Some buyers hesitate to complete the preapproval because they don’t want to commit themselves to any one lender or they’re worried about the impact on their credit. Don’t make this mistake! Getting preapproved does not obligate you to any lender, and even multiple credit checks will only hit your score once (and shouldn’t raise any red flags anyway).
Getting preapproved does have two big benefits. Firstly, it’ll tell you how much loan you will be able to qualify for. Secondly, it’s a powerful tool when it comes to the home search; some sellers or their agents will only consider offers from prequalified buyers.
5. Find an awesome agent (or team).
Whether you’re feeling a little overwhelmed by the whole process or you’re ready to start searching homes (or, you know, you’re somewhere in the middle there), the next step is to find an agent! Even if you’re feeling pretty confident, a buyer’s agent can be an invaluable tool in the real estate process, AND won’t cost you anything. That’s right—the seller pays both agent commissions.
What can a real estate agent do for you? Just about everything, actually; your agent will walk you through the whole process, help you determine exactly what you’re looking for in a home, make recommendations for lenders and inspectors, handle all the communication between you and the seller, organize the paperwork… and so much more.