If buying a home is on your to-do list for 2020, today I’ll discuss the three things you should focus on.
Are you thinking of buying a home this year? If so, you need to consider three questions:
How are you going to pay for it?
Most of us don’t have giant piles of cash just sitting around, so folks like us will have to get loans. There’s a big myth that you have to put 20% down to get a home loan, but that’s not true; in today’s market, there are lots of loan options and products that will allow you to buy a home with 3%, 5%, or 10% down. Certain government-backed programs like VA loans and USDA loans will allow you to buy a home with 0% down.
When saving up for a home purchase, you also need to consider closing costs. The general rule of thumb here in the greater D.C. area is that your closing costs will round out to about 3% of your home’s purchase price. Here’s a saving tip: Start an automatic deposit from your paycheck into a separate account so that you can start building that down payment. You can also look into micro-savings apps like Qapital or Acorn.
Once they begin actively searching, most of our clients take anywhere from three weeks to 12 months to find the right home for them.
What credit score do you need?
You need to make sure your credit is in really good shape, as credit-worthiness is an important factor in qualifying for a loan. To do this, first ensure that you make all your payments on time. Next, make sure you don’t open additional lines of credit or make large purchases before you buy a home. Hold off on buying a new car or new furniture until after you take possession of the home so you don’t face any issues during the buying process. Finally, use your credit card balances appropriately. Lenders only want to see you use between 15% and 20% or your card allowance at maximum. Pay those balances down.
What kind of home are you looking to purchase?
Flesh out a list of criteria that are important to you. What type of home do you want? In what neighborhood do you want to live? What amenities do you want it to have? Other factors, like school districts, outdoor space, and walkability are also important to consider before you begin your home search.
Rank your priorities in order, and then reach out to us so we can help you start your home search for you. Once they begin actively searching, most of our clients take anywhere from three weeks to 12 months to find the right home for them.
It’s never too early to get in touch and start working through the details, so if you’re thinking of buying a home this year, don’t hesitate to reach out to us. We look forward to hearing from you soon!