In line with a latest Harris Poll survey, 8 in 10 Americans say buying a home is a priority, and 28 million intend to do so within the next year. Homeownership has numerous both financial and non-financial advantages, so the interest is understandable.
But even so, it's unusual that all 28 million Americans will meet that target in the coming year. Analysts predict that approximately five million homes will be sold in 2023. Why is there such a disparity? It's partly because buying a home can be difficult.
When asked in the same survey, "Which of the following are preventing you from pursuing homeownership at this time?
"I don't have enough saved for a down payment," 34% said. 30% said, "My credit score."
If your objective is to buy a house, here's what you need to know to get there.
Put money aside for a down payment.
Your down payment accounts for a significant portion of the total cost of your home. Most home buyers put down some cash up front (a down payment) and then take out a loan (a mortgage) to cover the rest of the cost.
It's a long-held misconception that you must pay 20% of the purchase price as a down payment. In reality, a 20% down payment is not 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.
Whatever amount of cash you can save for a down payment, know that there is assistance available. A nearby lender can show you various options for getting closer to your down payment goal. There are even loan types, such as FHA loans, with down payments as low as 3.5% for some buyers, as well as VA and USDA loans with no down payment requirements for qualified applicants.
Aside from assistance programs and loan types, here are a few other pointers to consider while saving for your down payment:
Remember to account for closing costs. Closing costs are typically 2-5% of the home's purchase price, in addition to your down payment.
Keep your savings. Your down payment should not deplete your entire savings account. After you move in, you should still have some money set aside for homeownership expenses.
Investigate your options and seek expert advice from a trusted advisor. Do your research, ask questions, and look into the resources available for buyers like you.
Enhance Your Credit Score
Your credit score is a number that tells lenders how financially reliable you are. A higher credit score typically indicates that you will be able to borrow more money at a lower interest rate. There are steps you can take to improve your credit score if it is preventing you from getting an affordable mortgage. Here are two examples:
A. You must pay your bills on time. Your credit score improves when you pay your bills on time. When you're late, it takes a hit. How can you make it easier to pay your bills on time? When and where possible, set up automatic payments.
B. Change it up. Credit comes in many forms, ranging from auto loans to credit cards to mortgages. Having a mix of them also helps your credit score
If you want to buy a home this year, talk to a trusted real estate advisor to put together a team of professionals and start planning.
content Source: keepingcurrentmatters
