A Harris Poll survey has revealed that 80% of Americans consider purchasing a home as a priority, and 28 million Americans intend to buy a home in the next 12 months. While homeownership offers numerous financial and non-financial advantages, not all 28 million people are likely to succeed in achieving their goal in the next year. Industry experts predict that only about five million homes will be sold in 2023, indicating a significant gap between the intended and actual number of home purchases. This disparity can be attributed to various obstacles that can make it challenging to buy a home.
In the same survey, when asked, “Which of the following are preventing you from pursuing homeownership at this time?”:
- 34% answered, “I don’t have enough saved for a down payment”
- 30% answered, “My credit score”
If you’re aiming to buy a home, here’s what you need to know to accomplish that goal.
Save for Your Down Payment
The amount you pay upfront for your home, also known as the down payment, is a significant component of the home purchase cost. Typically, buyers pay a certain amount of money upfront and take out a loan to cover the remainder of the purchase price. It is a common misconception that a 20% down payment is mandatory, but this is not always the case. According to the National Association of Realtors (NAR), the median down payment for the average buyer is 14%, while for a first-time buyer, it’s just 6%. It is crucial to note that there is assistance available regardless of how much you can save for a down payment. A local lender can guide you through the various options to help you achieve your down payment goal.
For instance, there are loan types such as FHA loans, which offer down payments as low as 3.5% for some buyers. Moreover, there are options like VA and USDA loans that don’t require a down payment for eligible applicants. Aside from assistance programs and loan types, here are a few additional tips that can help you as you save up 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 shouldn’t deplete all your savings. It’s 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 numerical representation of your financial reliability to lenders. A higher credit score often means that you can borrow more money at a lower interest rate. If your credit score is hindering you from securing an affordable mortgage, there are measures you can take to enhance it. Here are two such steps: • Pay your bills on time: Paying your bills on time can help improve your credit score. Late payments can negatively impact your score. Setting up automatic payments can make paying your bills on time more convenient. • Diversify your credit portfolio: There are different types of credit, such as auto loans, credit cards, and mortgages. Having a mix of them can enhance your credit score.
Final Thoughts
If you have plans to buy a home this year, please do not hesitate to reach out to me so that we can begin preparing for your purchase.
Find out why Kaya Homes is the leader in Long Island Real Estate and are your go-to realtor in the Lynbrook, Oceanside, Malverne, Hewlett, Valley Stream, East Rockaway, Woodmere, Cedarhurst, Baldwin, North Woodmere, Woodsburgh, Hewlett Neck Hewlett Harbor, Bellmore,Wantagh,Merrick and Freeport area.
Wed, 01 Mar 2023 19:06:14 +0000
