Preparing Your Finances for a Successful Home Purchase in 2024

Is one of your 2024 New Year’s resolutions to buy a home? If so, good for you! There are plenty of fantastic short- and long-term benefits that homeownership offers.

The sooner you start planning, the better your chances will be of making good decisions, securing a mortgage, and getting into the home you want.

Upfront Legwork

Even if you don’t plan on buying a home for four, six or eight months, these tips will help smooth the way when the time comes.

  • Make a Budget

    Take a close, realistic look at your income, debt obligations, and spending. Lay out where your money goes and how much (if any) is left over at the end of the pay period. There are lots of costs to buying a home. Once your budget’s done, eliminate unnecessary spending where possible to build a better financial profile.

  • Educate Yourself on the Purchasing Process

    Go ahead and find a real estate agent and a loan officer. Talking with these professionals will prepare you for what’s to come and how best to prepare for finding your home and qualifying for a mortgage. You can also increase your knowledge of the process by reading online articles and blogs.

  • Check (and Improve) Your Credit Score

    A good credit score can be the difference between getting approved or denied for a mortgage loan. As soon as possible:

    • Pull your credit and review every line.
    • Dispute any discrepancies with the credit bureaus.
    • Get and keep all your accounts current.
    • Pay more on your credit card debt (if you can).
    • Avoid taking on more debt until you’ve purchased your new house.

  • Sock Away a Sizable Down Payment

    Remember trimming your budget? Stash all your extra dollars into your down payment fund to make sure you have enough cash. Other ways to save for a down payment are:

    • Sell stuff. Have a big yard sale, or sell items you no longer use on the many online resale sites.
    • Get a side hustle. Making money on weekends or a few nights a week can add up over time.

Remember, the bigger your down payment, the more options you’ll have when you start home shopping.

Start Making Moves

Now that you’ve built your foundation, you can move into the nitty gritty of finding your house.

  • Where Do You Want to Live?

    If you have an idea of the locations and neighborhoods you like, stroll and drive through them at different times of day, and talk to the neighbors. See if the atmosphere speaks to you. From there, research the home prices in your favorite areas to make sure you can find a place that fits your budget.Keep in mind, it will be easier to find a home to buy if you don’t narrow your search too much. Falling in love with a single street or neighborhood will probably drag out your home search longer than if you target several neighborhoods or blocks.

  • How Much House Can You Afford?

    This is a biggie. Avoid the mistake of buying more home you can afford and then struggling to meet the monthly mortgage payment. Use mortgage calculators (and talk to your loan officer) using your income, current debt load, and loan amount to determine a payment you feel comfortable with. Commit to not going above that amount, no matter how tempted you are.Homeownership should make your life more secure, not more stressful because you can’t meet you payment.

  • What Are Your “Must-Haves”?

    Pinpointing what you absolutely must have in your new home helps keep your search on track. However, the list should be short — unless your budget is large. If you want an updated kitchen and a big backyard, you may have to give up a large closet space and a two-car garage.
    By deciding on your shortlist of must-haves, you increase the likelihood of finding what you really want and being happy in your new place.

  • Working With the Right Pros

    Find a real estate agent and a loan officer who are knowledgeable, helpful and who you feel comfortable with. You might need to talk to more than one. They’ll be helping you throughout your journey, so you need to be able to ask them questions and trust they’ll get back to you quickly with accurate answers.

Preparing your finances for a 2024 home purchase can’t start soon enough. By jumping on it now, you have a better chance of getting approved for a mortgage and building the credit score you need to secure the home you want to live in.