If your goal for 2018 is to buy a home of your own, having the money for a down payment is often cited as the biggest challenge to homeownership. One way to enhance savings is to arrange automatic payments from your paycheck that would go into a separate savings account to be used exclusively for the down payment.
Another key consideration when buying a home is to ensure your credit history is clean. When you go to apply for a mortgage, lenders will want to see that you have been responsible in paying off all past debts, including credit cards, car loans and student loans. A better credit score equals a better mortgage interest rate which ultimately equals better buying power. To clean up your credit takes time, so plan ahead – usually a year to clean up your credit.
Credit bureaus recommend using no more than 30% of the total credit available to you. You also should determine if you are currently living within your means. To be able to save money for a down payment and paying down any debts to improve your credit score, you may very well need to lower your current spending in key areas such as traveling, new clothes and buying a new car. Living within a budget will go a long way towards putting you in a healthy financial position.
If you are buying your first home, chances are this is not your “dream home”. In reality, you may be one or two home purchases away from buying your “dream home”. The key to finding the right first home purchase for you is to find a home that meets as many of the criteria that you would like in your “dream home” but is within your budget. When looking for home, keep an open mind with regard to the type of property (i.e.; home, condo or townhouse) that may be the best option for your budget to get you as close to what you’re looking for in your “dream home”.
Once you determine how much you can afford from a financial perspective you will need to decide upon the location of where you want to live. We all want to live in the best neighborhoods but your budget may not support that option. You can live in a slightly less desirable neighborhood but you shouldn’t live in a home you can’t afford.
Buying in a transitional neighborhood for your first home allows you to get into the market relatively cheaply and build some equity. The objective is to identify an area on the upswing which will allow for the potential from increased home values as the neighborhood transitions.
Another factor to consider when buying a home is to determine what you must have as opposed to what you would like to have. An extra bedroom would be a must have if needed for a new baby but would be nice to have as a home office or exercise room. Knowing your home must haves as opposed to nice-to haves help to prioritize your home search.
As previously stated, your first home isn’t likely to be your “dream home” but it can be a stepping stone if you buy smartly and build up equity by paying down the mortgage as fast as reasonably possible. You will then be in a position to move up to that “dream home” with infinity pool and chef’s kitchen or realize that your “dream home” is a less fancy home but one that you own outright.
If you have any questions on buying or selling property in South Florida and are not currently working with an agent, please do not hesitate to contact me via email at jkenney@SFPropertyTeam.com or at 954-543-9483.
Wishing the best of Holidays to all and may all your real estate goals come true in 2018!