Make Buying a Home a Part of Your New Year's Resolution

11.21.2022 | Category: Homebuying

There's no better time than the new year to set new goals and plan for the future. If buying a new home is on your New Year's resolution list, it's important to map out how you plan to make your resolution a reality.

The path to homeownership doesn't have to be daunting. Here are six tips for making buying a home a part of your New Year's resolution.

Get an idea of your spending and saving habits

The first step to buying a home is to start saving for a down payment and budgeting for your monthly mortgage payments. A great way to do this is to get an idea of your monthly spending habits and how much you have left over. Then calculate the estimated mortgage payments for the home you wish to buy and see if that equals how much you have left over in your budget. 

Chances are there are some items you can cut back spending on and others you may need to get a little more creative. If you enjoy eating out several nights a week, you may need to cut back to only one night. However, if high interest charges on credit cards or personal loans are eating up your budget, you may need to make a plan for paying down your debt before you're ready to budget for a monthly mortgage. 

Once you've tracked your spending and honed in on areas you can improve, you're ready to start saving for a down payment. Keep track and celebrate your little wins like staying disciplined and within your budget. 

Check your credit report and score

Your credit score is a numerical calculation based on your payment habits, utilization rate, credit history, inquiries, and your credit mix. Each of these are weighted a little differently with the most important factors being how often you pay on time and how much of your available credit you use. 

Experian™, Equifax®, and TransUnion®, are required to provide a free copy of your credit report at least once a year for free under the Fair Credit Reporting Act (FCRA). Consumers can go to AnnualCreditReport.com to check their credit reports and in response to the recent pandemic, credit users can access their credit report weekly for a limited time.

If you have a high credit utilization ratio, make a plan to pay down your debts so that you can avoid paying interest. This will also help increase your credit score and help you qualify for better credit card and lending conditions. 

Many lenders, including credit card companies and banking institutions, also provide their consumers with a free credit score. You can usually request to receive a copy of your credit report along with your credit score when you apply for credit as well.

Get pre-qualified for a home mortgage loan

Pre-qualification is highly recommended before working with a real estate agent and is often required as part of the home offer process. Going through the pre-qualiification process will give you a clear picture of what you can afford, and what kind of monthly mortgage payment you can expect. It can also give you an idea of what closing costs might be and if you need to stash away a little more into your savings. 

Once you feel you have enough for a down payment, your credit score is in good shape and you have decided what your home budget is, reach out to our reputable home mortgage lender like Mutual of Omaha to get your pre-qualification started. 

Work with a reputable real estate professional

With your pre-qualification letter in hand, you're now ready to work with a real estate agent in the area you hope to live in. Work with this agent to get realistic about reaching your goals and what sacrifices you're willing to make to reach them. You might find you need to go a little outside your desired neighborhood or opt for a home in need of a little upgrading.  

A real estate agent can work with you to negotiate offers, tour homes and find more information about the neighborhood you're looking to buy in. They can also often refer you to other professionals you may need to rely on like home inspectors, maintenance and repair contractors, and landscapers. 

Set realistic house hunting expectations

Understanding the process for buying a home and all that goes into it is an important step toward homeownership. A variety of factors go into buying a home. Market conditions, home attributes, neighborhood and your financial situation all play a role in determining what house will be right for you.

However, there are always unexpected and unforeseen challenges that can come up when buying home. Prepare for the unexpected by working with your real estate agent to navigate the most common homebuying surprises and what to watch out for.

Place your offer and close your new home

Once you've placed an offer and have had it accepted by the home seller, your home will go into escrow and you will work with your lender to go through the closing process. 

Typically running at about 30-60 days, during this time you will be asked to provide personal financial information for you and for anyone you might be buying your home with. This will include proof of income, a list of all your assets, your full credit report in history as well as any liabilities including school loans, personal or business loans and credit cards. 

During this process you will likely undergo a home appraisal, a home inspection, as well as underwriting to ensure you're in good shape to buy the home you made an offer on. Once you're loan is in underwriting, you're in the home stretch. Don't be deterred if you run into delays or unexpected inquiries during this time. Your real estate professional and lender can walk you through any questions you might encounter. 

Once you sign your closing documents, you'll get the keys and the home will be yours! You'll then be able to move in and make the house your home. New Year’s resolution reached!

If you feel like you’re ready to buy a house in the new year, consider calling Mutual of Omaha. Our loan specialists can walk you through your financial options to set you up for success, no matter what your credit history might look like.