According to a recent Harris Poll survey, 83% of Americans say owning a home is a priority for them, and 28 million plan to do so within the next year. The benefits of homeownership, both financial and non-financial, justify this interest. However, it's unlikely that all 28 million Americans will achieve this goal in the coming year. Experts project approximately five million homes to be sold in 2023. Why such a significant difference? One reason is the challenges involved in the homebuying process.
In the same survey, respondents were asked about the factors that currently prevent them from pursuing homeownership. The results were as follows:
34% | I don't have enough saved for a downpayment |
31% | Low income |
30% | My credit score |
28% | The current economic climate |
27% | Lack of available homes within my budget |
23% | Mortgage rates are too high |
23% | Lack of available homes in the area Iwant to live |
20% | The housing market in my area is too competitive |
17% | Lack of affordable homes near my job |
15% | The coronavirus pandemic |
10% | I believe it's more affordable to rent than to buy |
10% | Lack of available homes within my preferred school district |
9% | Homeownership is no longer a priority for me |
4% | Other |
5% | None |
13% | N/A I do not want to purchase a homeat this time |
If your goal is to buy a home, understanding the necessary steps is crucial.
Save for Your Down Payment
When you buy a home, you need to make a significant upfront payment called the down payment. Basically, it's a part of the total cost that you pay in cash. Then, you get a mortgage to cover the rest.
Now, here's the thing: you don't always need to pay 20% of the purchase price as a down payment. In reality, the National Association of Realtors (NAR) reports that the median down payment for the average buyer is 14%, and for first-time buyers, it's just 6%.
No matter how much you can save, don't worry, there's help out there. Local lenders can present various options to help you reach your down payment goal. Additionally, there are loan types like FHA loans that offer down payments as low as 3.5% for some buyers. Qualified applicants may also have alternatives such as VA loans and USDA loans, which have no down payment requirements.
In addition to assistance programs and various loan types, here are a few more tips to help you save for your down payment:
Remember to consider closing costs, which are typically 2% to 5% of the home's purchase price.
Maintain your savings. It's important not to use up all your savings on the down payment because you'll need money for other homeownership expenses after you move in.
Explore your options and get advice from a trusted advisor. Do your research, ask questions, and make use of the resources available specifically for buyers like you.
Improve Your Credit Score
Your credit score shows how trustworthy you are with money in the eyes of lenders. A higher score means you can borrow more at a better interest rate. If your credit score is stopping you from getting an affordable mortgage, there are things you can do to make it better. Here are two ideas:
Pay your bills on time. It boosts your credit score when you do, but it hurts it when you're late. To make paying bills on time easier, consider setting up automatic payments.
Have different kinds of credit. Auto loans, credit cards, and mortgages are all different types. Having a mix of them helps improve your credit score.
Contact me today and let's make your real estate dreams a reality. Whether you're buying, selling, or investing, I'm here to provide expert guidance and personalized service. Don't wait another moment – let's start your real estate journey together. Call now to schedule a consultation and let me help you navigate real estate with confidence!