How to Make the Dream of Homeownership a Reality This Year

How to Make the Dream of Homeownership a Reality This Year

In 1963, Martin Luther King, Jr. inspired a powerful movement with his famous

“I Have a Dream” speech. Through his passion and determination, he sparked

interest, ambition, and courage in his audience. Today, reflecting on his

message encourages many of us to think about our own dreams, goals,

beliefs, and aspirations. For many Americans, one of those common goals is

owning a home: a piece of land, a roof over our heads, and a place where we

can grow and flourish.

If you’re dreaming of buying a home this year, start by connecting with a local

real estate professional to understand what goes into the process. With a

trusted advisor at your side, you can then begin to answer the questions

below to set yourself up for homebuying success.

1. How Can I Better Understand the Process,

and How Much Can I Afford?

The process of buying a home is not one to enter into lightly. You need to

decide on key things like how long you plan on living in an area, school

districts you prefer, what kind of commute works for you, and how much you

can afford to spend.

Keep in mind, before you start the process to purchase a home, you’ll also

need to apply for a mortgage. Lenders will evaluate several factors connected

to your financial track record, one of which is your credit history. They’ll want

to see how well you’ve been able to minimize past debts, so make sure you’ve

been paying your student loans, credit cards, and car loans on time. If your

financial situation has changed recently, be sure to discuss that with your

lender as well. Most agents have loan officers they trust and will provide

referrals for you.

According to ConsumerReports.org:

“Financial planners recommend limiting the amount you

spend on housing to 25 percent of your monthly budget.”

2. How Much Do I Need for a Down

Payment?

In addition to knowing how much you can afford on a monthly mortgage

payment, understanding how much you’ll need for a down payment is another

critical step. Thankfully, there are many different options and resources in the

market to potentially reduce the amount you may think you need to put down.

If you’re concerned about saving for a down payment, start small and be

consistent. A little bit each month goes a long way. Jumpstart your savings by

automatically adding a portion of your monthly paycheck into a separate

savings account or house fund. AmericaSaves.org says:

“Over time, these automatic deposits add up. For

example, $50 a month accumulates to $600 a year and

$3,000 after five years, plus interest that has

compounded.”

Before you know it, you’ll have enough for a down payment if you’re

disciplined and thoughtful about your process.

3. Saving Takes Time: Practice Living on a

Budget

As tempting as it is to pass the extra time you may be spending at home these

days with a little retail therapy, putting that extra money toward your down

payment will help accelerate your path to homeownership. It’s the little things

that count, so start trying to live on a slightly tighter budget if you aren’t doing

so already. A budget will allow you to save more for your down payment and

help you pay down other debts to improve your credit score.

A survey of millennial spending shows, “68% reported that shelter in place

orders helped them save for their down payment.” Danielle Hale, Chief

Economist at realtor.com, also notes:

“If there is any silver lining to the current economic

landscape, it’s that mortgage rates are hanging around

record lows…Additionally, shelter-in-place orders helped

many who were fortunate enough to keep their jobs save

for a down payment — one of the largest hurdles of buying

a home. The combination of low rates and the opportunity

to save is enabling many millennials to move up their

home buying timeline.”

While you don’t need to cut all of the extras out of your current lifestyle,

making smarter choices and limiting your spending in areas where you can

slim down will make a big difference.

Bottom Line

If homeownership is on your dream list this year, take a good look at what you

can prioritize to help you get there. To determine the steps, you should take to

start the process, let’s connect today.