Homeownership Resolutions For 2021:
The start of a new year always compels people to take a fresh look at their goals... from health and career to relationships and finance. But with historically low mortgage rates, increased home sales and price growth, and a tight housing inventory, the time is right NOW to also make some homeownership resolutions for 2021.
If one of your resolutions for 2021 is to buy a home, is this the year you work to improve your credit score, pay down some debt, or save for a down payment?
Home Buyer Resolution #1: Qualify for a better mortgage with a higher credit score.
Your credit report highlights your current debt, bill-paying history, and other key financial information. Importantly for your home-buying journey, it is also used by lenders and companies to calculate your credit score, which partly determines if you are qualified to obtain a mortgage. Therefore, before you start house-hunting, make sure your finances are in the best possible shape by checking your credit report from Equifax, Experian, and TransUnion (via AnnualCreditReport.com). You can also obtain your credit score for free from some banks and credit card companies.
Your credit score will be a number ranging from 300-850. Generally speaking, a credit score of 740 or higher is considered very good to excellent.2 If your FICO score drops below 740, you might need to work at boosting your score for a few months before you begin house-hunting. Ways to do this are to pay your bills on time every month, keep your credit card balances low, and avoid applying for new credit. But keep in mind that a perfect credit score is not needed to qualify for a mortgage.
Home Buyer Resolution #2: Improve your credit health by paying down debt.
Do you have student loans, credit card debt, or car payments tying up your income each month? That debt is hurting your “buying power,” or the amount of home you can afford. Not only is it money that you can't spend on your new home, but your debt-to-income ratio also affects your credit score, which we discussed above.
The less debt you have, the higher your FICO score and the better mortgage you can obtain. If you can, pay off some debt in its entirety—like a low balance on a credit card. Then apply that "extra" money you previously paid on that credit card to pay off bigger debt, like a car loan. Even if you can’t pay off all (or any) of your debt in full, reducing the balances of each account will help you qualify for the best possible mortgage terms.
Home Buyer Resolution #3: Create a financial safety net before applying for a mortgage.
Don’t forget that buying a home requires some cash reserves, as well. A down payment is typically 3.5%-20% of a home’s purchase price, and closing costs can exceed $5,000. You’ll also need money for moving expenses and any initial maintenance tasks that might pop up once you've purchased a home.
And as the pandemic taught us, you never know when an unforeseen event might cause a job loss, drop in income, or health scare, so having some liquid savings will ensure that you can still pay your mortgage if a crisis occurs. Dedicate some effort to building up your reserves. Cut down on unnecessary expenses, and consider having a portion of each paycheck automatically deposited into your savings account to avoid the temptation to spend it.
3 Resolutions For A New Year, New Home In 2021: Video
3 Reasons For A New Home In The New Year: Video
Let Us Help You With Your 2021 Home Ownership Resolution
Without a plan and a support system, 55% of Americans will break their new year’s resolutions. It helps to connect with a trusted real estate agent to keep you motivated and on track.
As local market experts, we have the knowledge, experience, and networks to help you achieve your homeownership goals, whatever they may be. Reach out to us today for a free consultation and commit to keeping your resolution to buy a new home in the new year.
Nina Hollander/Carolinas Realty Partners with Coldwell Banker Realty been opening doors for Greater Charlotte area home buyers for 20+ years. If your 2021 resolution is to buy a home in the Greater Charlotte area this year, I'd love an opportunity to earn your business, to exceed your expectations, and to show you how:
"The Right Broker Makes All The Difference."
Read more at: https://greathomesincharlotte.com/homeownership/2021-home-buying-home-selling-home-ownership-resolutions/
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