We are in the spirit of new beginnings heading into the new year; we feel an obligation to make New Year’s resolutions. The most popular resolutions focus on achieving a healthy lifestyle by losing weight or exercising more, but for most people, the personal resolutions we make are left by the wayside after the first 2-3 months. In 2021, try focusing on your homeownership resolution. Here are 5 New Year’s resolutions that will help you not only buy your first home but be able to do so comfortably and happily.

Resolution # 1: Save for a Down Payment and Closing Costs.

Unless you are a veteran who qualifies for a VA mortgage or qualify for down payment assistance, which both require no down payment, you will need enough cash on hand for a down payment and closing costs. VA loans and some down payment assistance programs also require you to pay for closing costs, which average about 3.5% of your loan amount.

If you haven’t started saving yet, reduce your living expenses as much as possible and put money away as you can with every paycheck. Pay yourself first to make sure you are putting away enough to reach your goals. Don’t save cash by using your credit cards to pay living expenses.

Resolution # 2: Prepare Your Credit Rating.

Your credit score and credit history will also determine whether you will qualify for a mortgage and how much interest you will pay. Credit scores change every month, and you should monitor yours and review your credit history using each of the three major credit bureaus: TransUnion, Experian, and Equifax. If you need to prepare your credit for homeownership, follow our recommendations from a series of blogs called Prepare Your Credit For Homeownership.

Resolution # 3: Reduce your Debt.

Lenders look at debt-to-income ratios to see if you will have enough each month to handle a mortgage payment in addition to your monthly debt payments. Your debt-to-income ratio is the total of all your monthly debt payments divided by your gross monthly income.

Resolution # 4: Get Pre-approved.

Whether you have just started your home buying journey or have been working on your debt and credit already, come to us to talk about the best buying options for you and if you are ready to get pre-approved. With a pre-approval in hand, you will be in better shape to make an offer. If your credit or “DTI” debt-to-income continues to improve, you may be able to get a new pre-approval for a larger loan.

Resolution # 5: Make a Realistic Budget.

Your monthly mortgage is just one of several costs of homeownership. Many first-time buyers fail to plan for insurance, maintenance, taxes, utilities, and homeowners association fees, which could cause some strain on your family’s budget. When you decide to make an offer on a home, ask your home inspector for rough estimates of significant repairs or upgrades you will have to make soon. Plan to set aside 1% to 2% of the value of your home each year for upkeep. These expenses, as well as your monthly mortgage payments, will increase with the cost of the home you buy.

If your budget comes in at a level that is more than you can comfortably afford, you will have to reduce the amount you can spend on purchasing a home.

There is no question that these are tough times for first-time buyers. A 2019 survey found that 12.3% of millennial renters who would like to become homeowners have given up on homeownership and plan to rent forever. But, the 2021 housing market is promising with its historically low rates. We have noticed an increase in new home construction, driving the housing inventory up. Don’t forget that you can schedule a phone consultation, and we can talk to you about your plan for your homeownership journey. We can help you achieve your goals.

Premier Mortgage Resources, LLC | NMLS #1169 | Equal Housing Lender. Not an offer to extend credit or commit to lend. California Licensed by the Department of Business Oversight, under the California Residential Mortgage Lending Act.