Everyone Has A Dream Of Owning Their Own Home
Making homeownership a reality in 2023 will rely strongly on your credit score, savings, and working with a great mortgage lender and real estate agent.
According to a recent Harris Poll survey, 8 in 10 Americans who are renters say buying a home is a priority, and 28 million Americans actually plan to buy within the next 12 months. Homeownership provides many financial and nonfinancial benefits, so that interest is understandable. So, how do you make your dream of homeownership a reality?
However, it’s unlikely all 28 million Americans will make homeownership a reality in the coming year. Experts project a total of around five million homes will be sold in 2023. Why is there such a big difference? It’s partly because there can be challenges to buying a home.
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.
Save For Your Down Payment To Make Homeownership A Realty
Your down payment is a big chunk of what you pay up front for your home. To make homeownersip a reality, buyers put down a certain amount of cash up front (a down payment) and then take out a loan (a mortgage) to pay for the rest.
It’s a longstanding myth that you need to pay 20% of the purchase price for your down payment. In reality, 20% down isn’t always required. In fact, according to the National Association of Realtors (NAR), today’s median down payment is 14% for the average buyer and just 6% for a first-time buyer.
Regardless of how much money you can save for your down payment, know there’s help available. A local lender can show you options to help you get closer to your down payment goal. Plus, there are even loan types, like FHA loans, with down payments as low as 3.5% for some buyers, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.
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 In Order To Make Homeownership A Reality
Your credit score is a number that indicates how financially reliable you are to lenders. A higher credit score usually means you’ll be able to borrow more money at a better interest rate. If your credit score is preventing you from getting an affordable mortgage, there are steps you can take to improve it. Here are two:
- 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 For Making Homeownership A Reality
If you want to purchase a home this year, let’s connect so we can get you started!