Five Steps to Take Now if You Want to Buy a Home In 2024
Blog posted On December 21, 2023
As we head toward a new year, your resolutions may include buying a new home in 2024. Homeownership in general, or an upgrade from where you are now, is at the top of the wish list for many people. Are you financially prepped for this important step?
Here are five things you can do to set yourself up for success:
- Consider your overall 2024 financial needs
You may have already decided a new home is in the cards for the upcoming year, but did you also think about your overall financial picture in 2024, and other needs that may exist? Buying a new car? Paying tuition? There are a couple reasons why buying a new home and a new car in the same year could be challenging.
First, your overall personal budget may not be able to accommodate the updated car payment and a new mortgage payment. (We’ll show more later on other ways your budget plays into getting a mortgage). Second, your credit score is often impacted by large purchases and taking on new debt. You wouldn’t want to hamper your ability to get approved for a mortgage because you just bought a new car.
You may consider skipping other large purchases in the year you’re planning to get a new home, or at least define your needs and goals and make sure a new home is really your number one need or priority.
- Consider your full picture budget
Your new mortgage payment is likely not the only monthly or additional cost that comes with moving into your new digs. When creating your new budget, don’t forget to take into account things like furniture for the home, increased utility costs, insurance for the value of your new place, and things like lawn care or other maintenance needs.
While you’re reviewing your spending plan, it’s also a great time to see if there is room in your monthly budget to pay down current debt. This can create the needed space for any additional costs associated with your new home. Paying down existing debt can also be impactful for your credit score – an important factor used to determine if you can be approved for a mortgage!
- Work on upping your credit score
Speaking of credit scores, almost all lenders use them as at least one factor to determine if you’ll qualify for a mortgage. Credit scores are traditionally a mix of several factors:
- Payment history (do you pay on time?)
- Credit utilization (how much of your available credit is being used?)
- Length of credit history (how long have you had access to credit?)
- Credit mix (do you have a healthy mixture of types of credit?)
- New credit (how much debt have you taken on recently?)
The ‘new credit’ factor could make multiple large purchases in the same year challenging. Everyone’s situations are different and there isn’t one way to improve your score, but knowing where you stand is a good step.
- Make a plan for your down payment
You’ve prioritized a new home, you’re prepared for possible increased expenses, and you’ve even started paying down other debts to give your credit score some help. Now what?
The down payment! Though many people assume 20% is the norm, there are many options for lower down payments. However, having a plan for how you’ll handle it personally is an important step in the mortgage process.
- Get preapproved
Having an approval from a mortgage company on hand before you start house shopping is one of the most impactful steps in being truly ready to buy a home. We may be able to help point out some of the things we’ve already talked about by taking a look at your full financial picture.
The preapproval is also your strongest tool while you’re home shopping. It shows the sellers you’re ready and able to get financing for the home you’re hoping to buy. This makes one strong piece of the overall purchase offer.
So now you’re feeling prepared for a possible home purchase in 2024 – or at least know what step you might tackle first. When you’re ready, let us know! We’re here to help.
Credit Karma Home Buying Article
Experian Credit Score Basics
Experian Home Buying Article