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How To Make Your Dream of Homeownership a Reality

How To Make Your Dream of Homeownership a Reality Simplifying The Market

According to a recent Harris Poll survey, 8 in 10 Americans say buying a home is a priority, and 28 million Americans actually plan to buy within the next 12 months. Homeownership provides many financial and nonfinancial benefits, so that interest is understandable.

However, its unlikely all 28 million Americans will accomplish that goal in the coming year. Experts project a total of around five million homes will be sold in 2023. Why is there such a big difference? Its partly because there can be challenges to buying a home.

In the same survey, when asked, Which of the following are preventing you from pursuing homeownership at this time?:

  • 34% answered, I dont have enough saved for a down payment
  • 30% answered, My credit score

If youre aiming to buy a home, heres what you need to know to accomplish that goal.

Save for Your Down Payment

Your down payment is a big chunk of what you pay up front for your home. For most home purchases, buyers put down some amount of cash up front (a down payment) and then take out a loan (a mortgage) to pay for the rest.

Its a longstanding myth that you need to pay 20% of the purchase price for your down payment. In reality, 20% down isnt always required. In fact, according to the National Association of Realtors (NAR), todays median down payment is 14% for the average buyer and just 6% for a first-time buyer.

Regardless of how much money you can save for your down payment, know theres help available. A local lender can show you options to help you get closer to your down payment goal. Plus, there are even loan types, likeFHA loans, with down payments as low as 3.5% for some buyers, as well as options likeVA loansand USDA loans with no down payment requirements for qualified applicants.

Beyond assistance programs and different loan types, here are a few other tips to help you as you save for your down payment:

  • Remember to factor in closing costs. In addition to your down payment, closing costs are usually 2-5% of the home's purchase price.
  • Maintain your savings. Your down payment shouldnt deplete all your savings. Its important to still have some money set aside for homeownership expenses after you move in.
  • Explore your options and lean on your trusted advisor for expert guidance. Do your research, ask questions, and look into the resources available for buyers like you.

Improve Your Credit Score

Your credit score is a number that indicates how financially reliable you are to lenders. A higher credit score usually means youll be able to borrow more money at a better interest rate. If your credit score is preventing you from getting an affordable mortgage, there are steps you can take to improve it. Here are two:

  • Pay your bills on time. When you pay your bills on time, your credit score improves. When youre late, it takes a hit. One way to make paying your bills on time easier? Set up automatic payments when and where you can.
  • Mix it up. From auto loans, to credit cards, to mortgages there are several different types of credit. And having a mix of them improves your credit score.

Bottom Line

If you want to purchase a home this year, lets connect so we can start preparing.

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