As 2023 approaches, it's time to consider your New Year's resolution. If you want to become a homeowner, now is the perfect time to prepare for your resolution. Our real estate agents suggest following this guide to help you prepare. 

• Start Working on Your Credit Score
  If you're planning to finance your home purchase with a mortgage, it's important to boost your credit score so it's as high as possible. The higher your credit score, the better your chances of being approved for a loan with favorable terms. Begin by paying down your credit cards and lines of credit. You should use 30 percent of your available balance or less to optimize your credit score. If you have three credit cards with a total available balance of $20,000, your balance should be $6,000 or less. Make all your loan payments on time, and avoid taking on a bunch of new debt before you apply for a mortgage. Each time you apply for debt, this adds an inquiry to your credit report that can lower your score. 

• Lower Your Debt-to-Income Ratio
  Your debt-to-income ratio refers to the percentage of your debt that goes towards paying your debt. Most lenders require all your debt payments, including your mortgage, to be 45 percent or less of your gross income. Your mortgage payment on its own should equal 28 percent or less of your income. Work to pay down your existing debt if it's causing a high debt-to-income ratio. You should also avoid new debt that will increase your debt-to-income ratio. This rule applies even when you've been pre-approved for a loan; your loan status can change if your financial situation changes or if your credit score decreases. 

• Build Your Savings Account
  There are a lot of expenses associated with purchasing a home, like your down payment, loan closing costs, moving expenses, utility connection fees, and the cost of decorating, furnishing, and caring for your new home. Now is the time to review your budget to determine what expenses you can reduce so that you have more money for your house savings fund. For example, if you can reduce your expenses by $500 and save this money for ten months, that's $5,000 to add to your house savings account.  

• Decide What You Want in a Home
  Spend time thinking about what traits you want in your new home. Think about what features will benefit your family and the ideal locations and neighborhoods for your lifestyle. Are you willing to complete renovations, or do you prefer a home that's mostly move-in ready? How large of a lot do you want? While a large lot is fantastic for outdoor activities and privacy, you'll have more lawn and property maintenance to fill your to-do list. Before you start your search, make sure you have criteria in mind.

Homeownership is an excellent New Year's resolution, but it requires preparation and planning. Getting an early start will help you reach your goal. Ready to start searching for your ideal home? Contact us to get started!