2017 is about to close. Just one more month and we’re saying hello to another year! Each new year brings a new hope and a new beginning. It’s a cycle of getting rid of the negative things and allowing positive growth in your life. It provides us a clean slate to remap and replan our lives.
Is buying a home part of your new year’s resolution? We bet you have been postponing your homeownership plans for years now. Don’t you think it’s about time you make your dreams come true?
The months of November and December give you a lot of time to prepare for your 2018 goals. You don’t have to wait for the first day of the new year to act upon your plans. Here are some ways to be ready to buy a home in the coming year.
Ways How to Become a Homeowner in 2018
Get Yourself Pre-approved
Getting a mortgage pre-approval is a good way to know how much money the lender will be will to lend you for a home purchase. It is one of the most important initial steps in becoming a homeowner.
A lender will take an in-depth look at your documents and credit information during a pre-approval. From this, they will determine your eligibility for a mortgage and know how much financing you will get. It shows the possible maximum loan amount and the interest rate on your future mortgage.
Getting yourself pre-approved for a mortgage makes homeownership a lot easier. When you already have a good idea on how much you can borrow from a lender, it is easier to search for a home that fits this budget. Undergoing a pre-approvalwill help you establish your footing before you start on house hunting.
Also, a mortgage pre-approval will help detect possible problems along the way. This is because the lender has already assessed your documents before the actual underwriting process takes place. If the lender sees some loopholes in your application, they may advise you to fix it so you can qualify for a mortgage with better rates and terms.
Review Your Credit Report
Many Americans take this step for granted but this is something that has to be done regularly.
Some people don’t bother reviewing their report. Others do so just once a year. However, it’s recommended that you should review your credit report at least twice a year.
By doing so, you can detect any errors in your report that may have caused your score to suffer. You may not realize this, but sweeping out errors on your report will have a huge positive impact on your credit score.
If you feel suspicious about a transaction appearing on your report, inform your creditor right way. Fraudulent transactions don’t only put you at a financial risk, it can also gravely damage your credit score if not fixed immediately.
To correct these mistakes, file a dispute to your credit reporting agencies. Make sure you follow the agency’s instructions in filing disputes as each has its own process.
Keeping your credit report clean will boost your scores. Moreover, a good credit score is a must when getting an attractive mortgage loan.
Consider Financial Gifts
Presents abound during the Holidays. If you have generous relatives who give you gifts every year, take advantage of this opportunity.
Instead of getting material presents, suggest for cash gifts instead. Your relatives may raise their eyebrows upon hearing this request. But if you tell them where the money will go, they will be more thrilled to help.
Use these cash gifts to fully or partially fund a down payment for the purchase of a home. The good thing about cash gifts is it isn’t just limited to your family members alone. A monetary present from a generous boss or a friend can also be used to pay for the down payment.
If you’ll cover the down payment with this money, be ready to provide a written proof that the funds are indeed given as a “non-repayable” financial gift and not a loan.
Use Year-end Bonuses as Down Payment
One of the reasons that make this season a time for merriment are the year-end bonuses. Be wise and put this money to good use by allocating it for your home’s down payment.
Don’t be a one-day millionaire and splurge on less important things. Financial preparedness is you want to be a successful homeowner. Holiday bonuses give you a head start on this journey, so use it wisely.
Most conventional lenders will require a 20 percent down payment for you to get a favorable rate. The larger the down payment, the lesser risk for lenders. So if you want to land on an affordable mortgage, put a 20 percent or larger down payment.
Don’t Splurge Too Much During the Holidays
With sales and discounts here and there, it is so easy to get tempted to overspend. But if you want to be a homeowner in 2018, Don’t make the mistake of splurging during the holidays.
Moreover, don’t ever max out your credit cards just because they offer 20 percent savings or more on holiday purchases. Remember that once you get a mortgage, you will have to pay the monthly payments. It will be hard to keep up with these payments if you also have card debts to deal with.
Remember that your credit will affect your mortgage application. What you think can be good savings now may cost you a lot more when your mortgage kicks in. Do not give in to the temptation of impulsive buying. Yoy have to remember your bigger goals for the coming year.
Find a Mortgage Lender
Finding a lender as early as now will give you more time to compare offers and rates. You can start shopping for lenders even before the coming year starts. This should be done first before you begin scouting for a property.
You can even ask different lenders to provide you with loan estimates. Asking for one doesn’t tie you down with them. In fact, it is very useful when you want to compare loans side by side. Once you have found the right mortgage lender, all else will follow. Becoming a homeowner is very achievable. You just need to be fully ready for it.