The holiday season can be busy, but it can also be a great time to start planning for your next home. If buying a home is one of your goals for the coming year, setting a few clear homebuying goals before the holidays can help you start the new year prepared.
Here are several steps to consider.
1. Review Your Budget
Start by determining how much you can comfortably afford each month.
Consider your income, existing debts, monthly expenses, potential mortgage payment, property taxes, homeowners insurance, and other homeownership costs.
Knowing your budget can help you focus on homes that fit your financial situation.
2. Check Your Credit
Your credit history can play an important role in the mortgage process.
Before applying for a mortgage, review your credit reports and look for errors or outstanding accounts that may need attention.
Avoid taking on unnecessary new debt while preparing to buy.
3. Set a Down Payment Goal
Determine how much you’d like to have available for your down payment and other upfront costs.
The amount you need can vary depending on the loan program and your financial situation. Setting a specific savings goal can make it easier to track your progress.
4. Build Your Homebuying Fund
A down payment isn’t the only expense to plan for.
Your homebuying fund may also need to cover closing costs, inspections, moving expenses, prepaid expenses, and potential repairs or improvements.
Consider setting aside additional savings so you’re not relying entirely on your down payment funds.
5. Get Pre-Approved
A mortgage pre-approval can give you a better idea of how much you may qualify to borrow.
It can also help you understand your estimated payment and make your home search more focused.
Getting pre-approved before you begin seriously shopping can also help you move more confidently when you find the right property.
6. Define Your Must-Haves
Before the holiday season gets too busy, make a list of what you want in your next home.
Consider:
- Location
- Number of bedrooms and bathrooms
- Home size
- Commute
- School considerations
- Outdoor space
- Home office needs
- Renovation preferences
Separate your must-haves from features that would simply be nice to have.
7. Set a Target Timeline
When would you ideally like to buy?
Maybe you want to purchase in the spring, move before summer, or simply be ready when the right home becomes available.
Setting a target timeline can help you determine what needs to happen between now and then.
8. Learn About Your Mortgage Options
Take time to understand the mortgage programs you may qualify for.
Different loan options can have different requirements for down payments, credit, interest rates, and other costs.
Talking with a mortgage professional early can help you understand your choices before you’re ready to make an offer.
9. Avoid Major Financial Changes
If you’re planning to buy a home soon, try to keep your finances stable.
Before making major purchases, opening new credit accounts, changing jobs, or taking on additional debt, consider how the change could affect your mortgage application.
10. Make a New Year’s Homebuying Plan
Once you’ve reviewed your finances, savings, credit, and housing needs, put everything into a simple plan.
Your goals might look like:
- Save $X for your home purchase
- Improve your credit profile
- Pay down specific debts
- Get pre-approved by a certain date
- Begin working with a real estate professional
- Start touring homes in a specific month
Specific goals are easier to track than simply saying, “I want to buy a house next year.”
Ready to Make Homeownership a Goal?
The holidays are about spending time at home, making memories, and looking ahead. If buying a home is on your wish list for the coming year, taking a few steps now can put you in a stronger position when you’re ready to shop.
Start with your budget, savings, credit, and timeline. Then talk with a mortgage professional about your financing options and what you may need to do to prepare.
Your future home may start with a goal you set before the holidays.
