Is Your New Year’s Resolution to Buy a Home?

Is Your New Year’s Resolution to Buy a Home?

Fairway Mortgage
Fairway Mortgage
Published on January 3, 2023
family-buying-a-home

Is Your New Year’s Resolution to Buy a Home?

We interviewed social media influencers with a combined 1 million followers. Here’s what they said about homebuying in the new year.

The holiday season is in full swing, and that means 2023 is right around the corner. Now is the time to reflect on the year that's been and set your new year's resolutions - especially your homeownership goals.

Click here to start your homeownership journey. (Feb 6th, 2023)

Use SMART goals to reach your New Year's resolution

We've all heard that most people fail at their new year's resolutions. But they often fail because their goals are too vague or sweeping. The key to fulfilling your goals is to make them specific and achievable and to know exactly what success will look like.

If you're determined to become a homeowner in 2023, here are some tips for making your homeownership goals a reality.

Learn More: 15 Homebuying Myths Your Parents Told You Debunked

Click here to start your homeownership journey. (Feb 6th, 2023)

There are lots of goal-setting frameworks out there, but one that can be quite effective for becoming a homeowner is the SMART goal methodology.

The "SMART" in SMART goals is an acronym that stands for:

  • Specific
  • Measurable
  • Achievable
  • Realistic
  • Time-Bound

Here's what these mean in terms of homeownership goals

Specific

Rather than saying, "I want to buy a home," define the type of home you want. Do you want a single-family home with a big backyard and plenty of space to garden? Are you in the market for a townhouse or condo with a homeowners association and community pool?

Click here to start your homeownership journey. (Feb 6th, 2023)

Get specific about the type of property you want to buy so you can tailor your home search, and home-buying strategy, to that requirement.

Measurable

Dig deeper into the type of home you need. What's the minimum number of bedrooms and bathrooms? Minimum square footage? How much storage do you think you'll need? Break down the absolute must-haves in the home so you have something to compare prospective properties against.

“I always tell my clients that before you even start the process, write down a list of everything you would want in a home and then narrow it down to just three things and focus on those top three things," says Sarah Ayala, a REALTOR® in Southern California, and owner of a popular TikTok channel with 49,000 followers. "Finding a home with every single one of your wants is impossible and what I like to call a 'unicorn home.' By narrowing it down in the beginning, you truly are setting yourself up for success and understanding on what you are not willing to compromise on."

Click here to start your homeownership journey. (Feb 6th, 2023)

Ayala also emphasized the importance of distinguishing what can be changed about a home and what can't.

"The most important thing to compromise on is home cosmetic condition," she says. "You can always change a home, but never its location.”

In other words, don't get so hung up on some outdated fixtures that you pass up a home in an ideal neighborhood. On the other hand, don't become so enamored by a newly renovated space that you don't realize how inconvenient it is for your commute to work or to your kids' school.

Click here to start your homeownership journey. (Feb 6th, 2023)

You need to see the whole picture when choosing a property. Having a list of non-negotiables can help you be objective and focus only on homes that suit your criteria.

Achievable

Take stock of your finances, including your credit score and savings. Are you ready to buy a home? Do you have money available for a down payment? There are many no and low down payment mortgage options, as well as down payment assistance programs in every state, so you may be closer to buying a house than you think.

But it helps to have an idea of your credit standing, your monthly debts, and what a comfortable mortgage payment might be for you before deciding whether you're financially prepared for a home.

Click here to start your homeownership journey. (Feb 6th, 2023)

Realistic

"Buyers should be realistic about what they can afford and in what location," says Jarred Alexandrov, a Boston-based loan officer with Fairway.

The best thing you can do for yourself is to get pre-approved* for a mortgage before you start looking at home listings. A pre-approval will tell you how much you'll likely be able to borrow, so you can narrow your home search to properties you can afford.

“Going through the pre-approval process will help determine how much of a loan you can qualify for today based on your credit scores, income, assets, and liabilities. This will give you the information you need to plan for next year instead of waiting until next year,” says Craig Tashjian, a senior mortgage consultant with Fairway in Newton, Massachusetts. “Do you need to boost your credit score, save for a down payment, pay off a loan? An experienced mortgage professional can counsel and coach you through these questions and prepare you to buy.”

Click here to start your homeownership journey. (Feb 6th, 2023)

Without a pre-approval, you might overestimate your price range and fixate on homes that aren't in your budget at this point. You want to be clear on how much you can borrow so you can identify homes in that range that meet all the must-haves you've already laid out.

A pre-approval prevents heartache, since you won't look at homes that are beyond your budget. But it also helps you stay on target with your home-buying goals. By focusing exclusively on homes you're sure you can afford, you can pay attention to the nuances of each property to determine which is really the best one for you.

Time-Bound

The timeline for buying a home averages 53 days, according to Ellie Mae, but it can vary based on where you're buying and the requirements you have for the home. Still, you can set timelines for each stage of the process to stay on track.

Click here to start your homeownership journey. (Feb 6th, 2023)

For instance, you might commit to applying for pre-approval by January 31st. Then, when you have your pre-approval, you might set a two-week timeframe for finding a real estate agent and scheduling house showings through them.

If you're having trouble finding houses you like, you could set a deadline for reassessing your search. So, if you haven't found any candidates in three months, you might regroup with your agent and revise your list of non-negotiables or look at homes in another area.

Setting deadlines keeps you accountable and helps you stay focused on your homeownership goals.

Click here to start your homeownership journey. (Feb 6th, 2023)

Get SMART: Buy early in 2023

Setting SMART goals can give structure to your home-buying aims, which is important because the sooner you buy a home, the more time you have to enjoy the potential financial benefits of the purchase. Homeownership is one of the pillars of wealth creation and generational wealth in the U.S., so buying now can create a strong foundation for your family for decades to come.

Additionally, industry expert and Fairway consultant Dave Stevens predict that winter and spring 2023 will be the best window for homebuyers for the next several years. Interest rate fluctuations and housing demand could shift the market back in favor of sellers toward the end of 2023 and into 2024 and 2025. If you've been thinking about buying a house, now is the time to make your move.

Expert tips for reaching your New Year's resolution homeownership goals

Setting SMART goals is a strong first step toward homeownership. But there are other ways to increase your chances of landing a great home in the new year as well.

Click here to start your homeownership journey. (Feb 6th, 2023)

Below are some expert tips on how to make 2022 the year you achieve your homeownership goals.

Demonstrate stability

Lenders like consistency - steady income, solid credit, a history of good money management. The more stability you demonstrate, the stronger a borrower you'll appear to be.

"The past couple of years have been unstable to say the least," says Jarred Alexandrov, a branch sales manager with Fairway in Boston MA "Lenders like to see stability and responsible management of your liabilities."

Click here to start your homeownership journey. (Feb 6th, 2023)

Pessolano recommends paying all of your bills on time and keeping your credit card balances at 30% of your credit line or less. "Under 10% of the limit can be even better," he says.

Related reading: How To Get a Good Credit Score and Why It Matters

He also advises making sure the money you'll use for your down payment and closing costs are in a bank account, rather than in cash. Your lender will want to see your bank statements for proof of funds to close, and they need to be able to trace any money that is being used for your home purchase.

Click here to start your homeownership journey. (Feb 6th, 2023)

Reduce your debts and increase your savings

The holidays can be a tough time to focus on saving money, but sticking to your budget now will help you buy a home in the new year.

"Save as much for a down payment as possible," Alexandrov says. Even if you plan to use a down payment assistance program or you qualify for a 0% down payment** VA or USDA loan, you will likely need money for closing costs and moving expenses.

Alexandrov also recommends reducing your monthly debts and avoiding taking on new debt. Lenders use your debt-to-income ratio (DTI) when calculating how much of a monthly mortgage payment you can afford. Reducing your debts before you apply for a home loan can increase your chances of qualifying and your approval amount.

Click here to start your homeownership journey. (Feb 6th, 2023)

Start before you think you're ready

With so many variables in the home-buying process, the sooner you get started, the better.

"Enter the buying season a little earlier than you thought to give yourself time to browse, acclimate, and watch the market," says Boston real estate agent Lauren Matera.

She also advises being ready to move quickly once you find the right home - that's where all the groundwork you've done comes in.

Click here to start your homeownership journey. (Feb 6th, 2023)

“You have to be quick to communicate listings you're interested in and prepared to make fast decisions," Matera says. "This is where a firm understanding of wants, needs, and non-negotiables is critical. You should have a comfortable and open channel of communication with your agent and lender to take fast action and be timely with submitting or relaying interest or offers."

Matera's top tip for first-time homebuyers is to communicate with your real estate agent and make sure they understand your homeownership goals and limitations. The clearer you are about your expectations and budget, the more efficient they can be in helping you find the right house.

Find the right real estate agent

Although the bidding wars of 2020 and 2021 have cooled off, the housing market is still competitive. In that environment, you need to work with a real estate agent who knows how to give you an edge.

Click here to start your homeownership journey. (Feb 6th, 2023)

“Work with a real estate agent who has experience crafting a competitive offer. I send my new buyers an email when we get started showing the parts of a contract that can be manipulated in order to make their offer more competitive," says Cat Morris, a REALTOR® in Boston MA who is popular on Instagram and TikTok. "When we are ready to write an offer, they have a clear understanding of the contract. We then can work together to write an offer that is best for them. Not all agents know how to do this."

Don't just work with the first real estate agent you encounter. Ask questions about their experience and the types of homebuyers they work with most often.

"I'd recommend asking how many houses they sold last year, how long they have been actively selling, if they work with more buyers or sellers," Brown says. "This will give you a clear idea of who you're hiring.”

Click here to start your homeownership journey. (Feb 6th, 2023)

Work with someone who knows the area where you want to buy as well, says Atlanta REALTOR® and social media influencer Glennda Baker.

“All agents are not created equal. Make sure that when looking for an agent to help you find your dream home that the agent has experience in the area and/or neighborhood that you are looking. Agents that are hyperlocal in the area," Baker says. "They will most likely know of off-market opportunities and have intimate knowledge of things that may affect the value positively or negatively of the property."

Tashjian recommends thinking about the other professionals you’ll need to work with as well. “Form your team of professionals early,” he says. “A great Realtor, mortgage lender, and real estate attorney can make all the difference when negotiating an offer in a hot real estate market.”

The bottom line on reaching your New Year's resolution

If your new year's resolution is to become a homeowner, start planning how you'll achieve that now. Set your SMART goals, organize your finances, and schedule calls or introductory meetings with local real estate agents. Then you can hit the ground running on the path to finally becoming a homeowner in 2023.

Show me today's rates (Feb 6th, 2023)
Fairway Mortgage
Fairway Mortgage Boston, Massachusetts
Click to Call or Text:
617-959-4885