Become a Homeowner in 2019
This is it — 2019 will be your year. It’s been a hopeful wish at the back of your head for years, and it’s made its way into your New Year’s resolutions at least twice. But now, you’re finally going to make it happen.
This year, you’re finally going to become a homeowner. And I’m here to help you make it happen.
Step 1: Start planning.
First things first: You’ll need a plan before you go diving into any home listings. Otherwise, you could find yourself tripping into a money pit.
Luckily, you don’t have to develop a game plan all on your own. A good lender can help you out with that.
So before making any sudden moves, find yourself a local lender, and set up a meeting. Chat with them about your available options. Iron out your budget. See how your credit score is doing. Find out which areas of your financial life need some TLC, and you’ll be able to address those issues before you go signing any contracts.
Trust me on this one — being prepared for homeownership makes a world of a difference.
Step 2: Start saving.
If you’re like most people on the planet, you’ll need to start saving up for that down payment.
If you don’t already have one, open a seperate savings account and start saving on a regular basis. And if you feel like your savings account needs a boost, there are options out there that can help you make the down payment (which is another thing your lender will be able to help you with).
Bottom line: Don’t be afraid of the down payment! It’s more doable than you think. So start saving, and be aware of the options available to you.
Step 3: Gather your paperwork.
Take my word for it: Buying a home requires a lot of paperwork. So the sooner you get those documents organized, the better. Your lender will be able to tell you everything you’ll need, but for now, make a folder of these documents:
Names/addresses of employers over the past two years
Pay stubs of each applicant (reflecting a minimum of 30 days of income)
One to two years of tax returns
W-2s over the past two years
Bank statements over the past two to three months
Completed and signed Form 4506-T or 4506T-EZ from your Mortgage Banker
Proof of pension income (if applicable)
Social security and disability payments (if applicable)
Earnest money deposit
Security accounts (stocks, bonds, life insurance, etc.)
Step 3: Keep an eye on your credit.
Your credit score is a huge part of the home-buying process. A poor credit score can keep you from your dream home, so it’s important to stay on top of your score.
Your lender will be able to tell you if your credit score is in good shape. And if it’s not, then don’t worry. Fixing your credit score is possible, and it’s not as difficult as most people think. There are many ways to polish up your credit score, but here’s a good place to start:
Monitor your credit report – Whether you’re using a trusted credit monitoring service or are just keeping track of it yourself, you’ll need to keep an eye on your credit report. This will give you the chance to refute any negative items and report any instances or error or fraud.
Stay on top of your bills – A huge chunk of your credit score is based on how often you pay your bills on time. So stay on top of your monthly payments, and you’ll be amazed at how quickly your credit score improves.
Generate new credit – Most people are hesitant to open up new credit cards. But if you’re looking to boost your credit score quickly, it’s a great idea (as long as you make your monthly payments on time).
Step 4: Apply for a home loan.
When you’re ready, of course.
You’ll need to have all of your ducks in a row first. Make sure your accounts are in good standing and your credit score is in check. Organize all of your paperwork. Save up a good chunk of money. And then when you do apply for that home loan, you’ll get the best interest rates and the process will go by smoothly.
Don’t wait for New Year’s. Start preparing for homeownership now, and you’ll be a homeowner before your other New Year’s resolutions even have time to kick in.