For many Americans, a popular dream goal for the new year or near future, is owning a home: a piece of land, a roof over our heads, and a place where families can grow and flourish.
If there has been any silver lining to the current economic landscape, it is record-low mortgage rates. Combined with shelter-in-place orders helping working professionals to save for a down payment, many are moving up their home buying timeline – especially millennials.
Understanding the process of the home buying experience is necessary for success, including how much you can afford to spend for a mortgage. Financial planners recommend that limiting the amount one spends on housing to be 25% of their monthly income.
Lenders will evaluate several factors connected to one’s financial background, including credit history. Other areas for consideration typically include management of past debts such as student loans, credit cards, car loans. Any recent changes in one’s financial situation surely need to be discussed with the lender as well. A trusted, experienced agent has excellent referrals for loan officers.
Options for a down payment are also critical for consideration. There are now many resources in the market to potentially reduce the amount one needs to put down.
Starting small and consistently is the best plan for saving for a down payment. An automatic amount taken from each paycheck can add up powerfully, especially with compounded interest. Discipline combined with mindfulness is also excellent practice for well-laid financial planning in the future.
Saving money during this ongoing pandemic season has helped many also pay down debts which dramatically can improve credit scores.
It is entirely possible to make homeownership a dream come true in 2021 while managing income and savings carefully – such priorities can surely piggyback on positive conditions in the market at this time.