Happy 2020! We are now into a new decade, one full of new promises. What better way to kick off the decade than with a new home. If buying a home in 2020 is one of your New Year’s resolutions, here are tips from Mortgage 1 on ways you can make that steely resolve a reality.
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One of the first things your mortgage lender will do is check your credit to determine your debt-to-income ratio to determine how much of a mortgage loan you qualify for. Make sure there are no surprises on your credit report. A credit score of 690 or higher is considered “good.” If your credit needs clean-up, start working on it now so that your score is up to par before you start the pre-qualification process.
Gather all the paperwork you’ll need for your approval — income tax statements, pay stubs, W2s, proof of income if you are self-employed, bank and savings records. Have everything ready so you can hit the ground running when it’s time to seek a loan. Also get in touch with a real estate agent or two. Find someone who is compatible with your style and preferences.
Sitting down with a mortgage lender now can save you time later. Securing pre-approval on a mortgage will usually lock in an interest rate for 90 days and allow you to focus on homes that are in your price range. Pre-approval also shows sellers that you are serious.
It’s never too early to start house shopping. There’s usually not as much housing inventory in the winter as the summer, but there are also fewer buyers in the cold months. Nothing prevents you from driving through neighborhoods to see which areas you like. You can also check prices.
As you pay off any holiday debt you may have accumulated, you also want to avoid making any large purchases of your own in the coming months. As tempting as it may be to take advantage of after Christmas and Super Bowl sales, keep your credit card in your wallet for the time being.
Did you get any cash gifts for Christmas? Sock them away and don’t touch them. Perhaps one of your other New Year’s resolutions is to save more in 2020. If so, great. If you have any money in the stock market, you might also consider taking advantage of the big stock market gains of 2019 by converting some of your holdings into good old fashioned cash. Consult with your financial and tax advisors first, of course.
This goes hand-in-hand with avoiding large purchases. Scrutinize your budget for any unnecessary spending, such as movies or restaurant dinners. If you’ve always taken a trip to a warm weather destination during the depths of January, perhaps postpone that trip to next year, after you’ve secured your new house.
Many people make job resolutions each year and seek out new opportunities or careers. If you are serious about finding a house in the first quarter of 2020, put those career aspirations on hold for the time being. Starting a new job just as you are applying for a mortgage loan will make the lending process more difficult and time consuming.
A hidden cost in many people’s budgets are monthly subscriptions fees. Netflix, Hulu and Disney+ subscriptions aren’t especially pricey individually, but collectively they can add up. Also look at your mobile phone plan. Are you paying for a package of minutes you don’t always use? Maybe you can drop down to a lower package or find a more affordable provider. Likewise for cable TV and internet services.
Do you expect a refund on your 2019 taxes? If so, get your taxes submitted as quickly as possible. Contact your employer and others from whom you expect tax documentation and see if they can send it sooner rather than later.
The new year is only a day old, but you don’t have to let another day pass without taking a step toward your home buying dream. Apply anytime using our convenient online mortgage application.