5 New Year's Resolutions for First-Time Home Buyers

A New Year signifies change and a fresh start. It’s an opportunity to breathe new life into goals you put on the backburner in years past.If buying your first home is at the top of your to-do list for 2016, January is the right time to start preparing for homeownership. Here are five resolutions you should set this year to lay down the stepping stones that will lead to your first home. 

Keep Track of Your Credit Score

According to a financial literacy survey published in 2015 by LendingTree, nearly 60% of Americans don’t know their credit score.

Your credit score impacts whether or not you’ll get approved for the home of your dreams. If you haven’t monitored your credit score in the past, resolve to keep track of where you stand this year.

Get your free credit report from annualcreditreport.com (you’re entitled to one annually). Use it to check for errors in your history that can affect your score like delinquencies, late payments, liens or fraud. Then sign up for regular FICO score monitoring leading up to your home purchase.

Pay Off Debt Within Reason

Often when holiday excitement dies down the buyer’s remorse and holiday debt “hangover” sets in. If you’re sitting on debt, commit to paying off enough in 2016 to improve your debt-to-income ratio.

Eliminating debt altogether is ideal, but it may be unrealistic if you also need to save for a down payment and closing costs. Instead, focus on bringing your debt-to-income ratio below 36% which will still qualify you for favorable mortgage programs and rates.

Polish Off Your Down Payment

Review how much you have saved for a down payment and figure out how much more you must save to qualify for the house you want. Keep a household budget in 2016 to help you reach the goal. Why’s this important?

According to a Gallup survey, only one-third of Americans keep a detailed budget which is a missed opportunity to take control of your money. If you want tips to save for a down payment, check out our recent post on the topic.

Get Prequalified & Find a Real Estate Agent

Prequalifying for a mortgage is the first thing you should do to start your home search. A prequalification letter gives you an estimate of the mortgage amount you can get approved for.

You can use the estimate while searching for a home to narrow down your options. If you’re ready to check prequalification off of your to-do list this year, we offer a free online prequalification application, just contact us to get started.

When hunting for a real estate agent, ask for recommendations. Check reviews and testimonials. Your agent will help you make one of the largest purchases of your life. Choose someone you can trust.

Simulate Your Budget as a Homeowner

Once prequalified for a home, start simulating a budget that includes paying your mortgage and other costs. This is crucial for first-time home buyers since owning a home comes with more financial responsibility than renting.

Add expenses like insurance and taxes into your budget to simulate payments. You’ll know you can comfortably afford the mortgage if you can manage payments and have money left over for living expenses. If not, adjust the price of the homes you’re shopping for to make sure you can afford them.


Interested in learning more about your mortgage options or prequalifying for a home loan?