How To Make Your Dream of Homeownership a Reality

According to a recent Harris Poll survey, 28 million Americans genuinely plan to buy a home within the next 12 months, and 8 in 10 Americans think that purchasing a home is a priority. It makes sense that there would be interest given the numerous financial and non-financial advantages of home ownership.

It's improbable that all 28 million Americans will succeed in that endeavor in the upcoming year, though. According to experts, approximately five million residences will be sold overall in 2023. Why is the difference so significant? It's mainly because purchasing a home might provide difficulties.

In the same survey, when asked, “Which of the following are preventing you from pursuing homeownership at this time?”:

• 34% answered, “I don’t have enough saved for a down payment”
• 30% answered, “My credit score”

If you’re aiming to buy a home, here’s what you need to know to accomplish that goal.

A significant portion of the upfront cost of your house is made up of your down payment. Most house buyers make a down payment (an upfront monetary contribution) and then borrow money (a mortgage) to cover the remaining costs.

Save for Your Down Payment

Your down payment is a big chunk of what you pay up front for your home. For most home purchases, buyers put down some amount of cash up front (a down payment) and then take out a loan (a mortgage) to pay for the rest.

It's a common misconception that your down payment is a big must equal 20% of the buying price. Actually, 20% down is not always necessary. In reality, the National Association of Realtors (NAR) reports that the median down payment for today's buyers is merely 6% for first-time buyers and 14% for the average buyer.

No matter how much cash you can save up for a down payment, be aware that assistance is available. To assist you get closer to your down payment target, a local lender might present you with options. Moreover, there are lending options including FHA loans that only require 3.5% down payments for some buyers as well as VA loans and USDA loans that don't require any down payments at all for qualified candidates.

Beyond assistance programs and different loan types, here are a few other tips to help you as you save for your down payment:

• Remember to factor in closing costs. In addition to your down payment, closing costs are usually 2-5% of the home’s purchase price.
• Maintain your savings. Your down payment shouldn’t deplete all your savings. It’s important to still have some money set aside for homeownership expenses after you move in.
• Explore your options and lean on your trusted advisor for expert guidance. Do your research, ask questions, and look into the resources available for buyers like you.

Improve Your Credit Score

Your credit score is a statistic that demonstrates to lenders your financial dependability. You'll often be able to borrow more money at a better interest rate if your credit score is higher. You can take measures to raise your credit score if it is keeping you from obtaining an affordable mortgage. These two are:

• Pay your bills on time. When you pay your bills on time, your credit score improves. When you’re late, it takes a hit. One way to make paying your bills on time easier? Set up automatic payments when and where you can.
• Mix it up. From auto loans, to credit cards, to mortgages – there are several different types of credit. And having a mix of them improves your credit score.

Bottom Line

If you want to purchase a home this year, let’s connect so we can start preparing!