(edited for 2018)
As 2018 ends, it’s almost time for that dreaded age‑old tradition — making New Year’s resolutions. Is it worth the trouble? After all, everyone knows they’re made to be broken, right?
Experts say the trick is to make them manageable. Don’t choose something unrealistic. Don’t say, “I want to be rich.” That’s a wish— not a resolution! And don’t choose anything overwhelming like, “I want to lose 200 pounds.” Instead, break that down into smaller segments, such as losing 3‑4 pounds per month.
But if buying or selling a house is something you plan to do in the coming year, this is the perfect time to set some resolutions that are not only possible, but that will go a long way toward helping you reach your house‑hunting or selling goal.
Well, duh. That may sound like common sense, but you’d be surprised at how many people may know that (in the back of their minds), but then don’t really do it. Or they save some, but nowhere near enough. Realtors and mortgage lenders suggest setting aside a specific amount each month to use as a down payment on a house. The amount varies. It may be an amount designed to get you to your goal number within a specific period. It may just be whatever amount you can afford each month. Figure out (with the help of a real estate professional) what priced house is affordable for you based on your own comfort and what price your mortgage lender will approve. Decide what amount you’ll need for a down payment (figure at least 3.5% or more of the cost of the house). Then consider possible savings scenarios based on your current disposable income and how soon you want to buy that house. But don’t make a vague or unattainable monthly goal — and then just forget about it.
Check your credit score — and work to raise that score if necessary.
Credit scores are very important when it comes to impressing lenders. They want to see that their money is going to someone that can pay back that loan. This simple score will affect whether you’re approved for a loan at all and will determine your interest rate — and ultimately, the amount of your monthly payment. Your credit history is also an important piece of the puzzle. So, look closely and if your credit history is less than stellar, make a conscious effort to raise that score and improve your history going forward.
Good mortgage rates are generally offered to those with scores 720 and above. It may take as long as a year to improve your score, using these tips:
- Pay bills on time and pay off the balance each month.
- Consider cutting your number of credit cards down to 3.
- But think twice about getting rid of old cards since longevity is one of the factors used to determine your score.
Check out government programs for homebuyers.
The Federal Housing Administration (FHA) offers loans for both first‑time homebuyers and others with a lower credit score or who want to buy a house with a lower down payment. Look at the FHA website to see if you qualify.
Gather your files.
When you make an offer on your dream home, you’re going to need a lot of information — so you may as well have it handy now:
- Tax returns
- Income statements
- Bank statements
- Credit card information
These are among the paperwork your lender will typically request. You’ll also need to fill out a mortgage application, but wait on that so you have the most current (and hopefully, best) financial records available.
If you’ve ever watched TV shows such as “House Hunters,” you know that many potential buyers will get pre‑approved for a loan in advance. That way, they know just how much they can spend (i.e. how much the bank will loan them) toward their dream house. While pre‑approval is no guarantee of future financing, it tells the seller and other mortgage lenders that you’re most likely a good risk (which is to say, very little risk at all!).
Get your house in order.
Literally. Take a good hard look around you and make a list of the things that need to be done before you can list your house:
- Clearing out general clutter
These are often high on the list for sellers wanting to get the best price in the least time. And that’s pretty much everyone!
Calculate your time frame.
Are you buying another home? Building? Moving out of state? Figure out how soon you could you be ready to move — and how long you could wait.
Find a good realtor.
Working with a knowledgeable real estate agent should be first on your list. You may be the one choosing your New Year’s resolution, but realtors can help both buyers and sellers by helping you make preparations that will set those goals in motion — making for a very smooth transaction.
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