Planning to Buy Your First Home in 5 Years? Start Taking These 7 Steps Today
Where do you see yourself in 5 years?
If you’re someone who’s living in an apartment or a young adult who’s still living with your parents, you might be envisioning yourself, living in your very own house.
Of course, purchasing your first home can feel overwhelming. There are a lot of terms to learn, money to save, and property agents to disturb. If you want to own a house in a span of five years, you need to start taking steps today. Yes, right now.
To get you started, here are 7 crucial steps that will help get you in the right direction to living in your dream home.
Set Up a Savings Fund for Your Dream Home
Start saving money as early as today. Establish a savings fund for your home purchase and start financing it each paycheck. According to Randall Yates, CEO of The Lenders Network, home buyers must have at least 10% of the property’s purchase price in their savings fund.
Additionally, lenders would like to see at least 2-3 months’ worth of mortgage payments in your account.
Work on Your Credit Score
Check your credit score. Do you feel like it needs improvement? Start making changes today. You have plenty of time to boost your credit score and fix any negative marks. In fact, you can take steps to dramatically enhance it in 6 to 12 months.
Actions, like paying off debts and keeping balances low and paying your bills on time, can significantly improve your credit score. Should you apply for a loan in the future, you are more likely to be qualified for better mortgage rates.
Find and Compare Mortgage Brokers
As early as now, shop around and compare mortgage brokers. A good broker will help you find the best rate for your loan.
Ask your family members, colleagues, and friends for their broker referrals. If you know a credible real estate agent, you can also seek for a recommendation. Read online reviews as well.
Pre-Qualify for a Mortgage Loan
If you’re fully ready to house hunt, it’s important to get pre-qualified.
The home market can get pretty competitive, and you might be competing against other buyers for the same home. Getting pre-approved will assure a property agent and potential seller that you’re a legitimate buyer and you’re able to get the required financing.
Getting pre-qualified will also help you understand how much you can afford. This way, you can limit your options and not waste your time and energy on homes outside your budget.
Keep Your Financial Status Stable
Next to saving up money for your dream home, it’s important to keep your financial health in check and focus on your goal.
Avoid making any major purchases, taking out a car loan, and opening up a new line of credit. During the mortgage application process, you should also avoid quitting and changing jobs or switching to part-time hours, which can significantly destabilize your income and your ability to repay.
If you’re a couple, planning to buy your own home in five years, you should be on the same page in terms of your saving and spending habits.
Make a List of Your Dream Home Must-haves
Now that we’re done doing the math, it’s time for the fun part. Write down your home wish list:
Do you want a single-story home or a double-story one? Where’s your ideal location? How big is your dream home? Do you want to have a garage or dedicate the entire exterior to your landscaping ideas? Are you going to grow old in that home, or do you have any plans of relocating in the near future?
The list will make it easier for you and your property buyer’s agent to search for homes that fit your current and future needs.
Find the Right Property Agent for You
It’s important to work with a property buyer’s agent who understands your unique buying needs. Next to knowing the area well, your agent should have your best interest in mind.
Research and interview several property agents – you might want to avoid those who are desperate for commissions, forcing you to purchase high. Look for realtors with strong negotiating skills who are willing to fight just give you the best deal for your home.