Considering buying a home in 2020? With the new year fast approaching, it’s a great time to begin planning. From first-time homebuyers to those looking to upgrade, there are several steps you can take to help ensure a successful purchase in the future.
Check your credit. It is important to know your credit score upfront because it will help determine whether you’ll be able to secure a mortgage loan and gauge what your interest rate will be. You can check your credit score through several free online credit reporting agencies or you can inquire with your bank. According to Ron Wivagg, national sales support manager of Prosperity Home Mortgage, LLC, a credit score of 740 and above will generally get you the best interest rate available.
While credit score is one factor in determining interest rate, there are other criteria that lenders take into consideration including down payment, debt-to-income ratio and the type of property being purchased (for example, single family or condo). If your score is below 640, you may need to work on improving your credit to qualify for or receive the best rate. Wivagg suggests contacting a local loan officer as they may have suggestions on how to improve your credit. Prosperity also has several tools available to its mortgage consultants to help their clients, including a “What if” simulator, which is offered through Prosperity’s credit vendors and can provide advice on how to improve a credit score.
Avoid making large purchases. If you’re planning on buying a home in the near future, hold off on making any other large purchases, such as cars or jewelry. This can affect your debt-to-income ratio, and in turn, affect your mortgage loan.
Consider the down payment amount. While there are a few lending programs that require zero down payment, most mortgage loans require a down payment – for example, a conventional loan requires 3 percent down and an FHA loan requires 3.5 percent down, explained Wivagg. If you’re planning on buying a home in 2020, calculate how much you’ll need to save for a down payment and begin a savings plan.
Get preapproved for a mortgage. Before you begin your home search, it is important to get preapproved for a mortgage loan. This will help determine your qualification and price point, and it will expedite the financial process at closing. “The mortgage interest rate you obtain can directly impact the loan amount for which you may qualify,” said Wivagg. “A lower interest rate can result in a higher purchase price and loan amount.” If you are seriously considering purchasing a home in 2020, you should get preapproved for a mortgage now. With rising interest rates, the sooner the better, suggested Wivagg.
Determine what you’re looking for. What are your exact wants and needs in a home? Be sure to consider important factors, such as the type, size, amenities and lifestyle when determining what kind of house you want to buy. A real estate agent can help you find a home that matches your lifestyle desires. You can even search for current homes for sale based on specific lifestyle qualities like a waterfront view or close-by golf course on longandfoster.com.
Research neighborhoods and begin your home search. Get a feel for what you want by looking at homes online or by attending open houses. Your real estate agent can provide you with a market analysis by neighborhood. Long & Foster offers in-depth insights on hundreds of communities across its market on its website.
Contact your local real estate agent. Winter is a great time to meet with a Realtor if you’re interested in purchasing a home in the upcoming year. Your real estate agent can guide you through the buying process based on your individual needs. They can even sign you up to receive automatic alerts based on specific criteria, so you’re informed the minute a new home comes on the market. To save time and confusion, be sure to articulate your specific home requirements to your agent upfront.
If you currently own a property and are looking to purchase a new home in 2020, get your home ready for sale now. Your real estate agent can help walk you through what you need to do to sell your house before buying a new home.