How To Make Your Dream of Homeownership a Reality

How To Make Your Dream of Homeownership a Reality

Did you know that in a recent Harris Poll survey, 8 in 10 Americans said that buying a home is a priority? It also pointed to the fact that 28 million Americans actually plan to buy within the next 12 months. It is understandable, because homeownership provides many financial and nonfinancial benefits.

The bad news is that it’s unlikely all 28 million Americans will accomplish that goal in the next 12 months. Experts project a total of around five million homes will be sold in 2023. That number may sound large, but it isn't at all when you consider the real estate market. 

In the same survey, when asked, “Which of the following are preventing you from pursuing homeownership at this time?”:

• 34% answered, “I don’t have enough saved for a down payment” (more on that below, and it will surprise most viewers)
• 30% answered, “My credit score” (this one is tougher, but our strong network can help most people)

If you’re aiming to buy a home, here’s what you need to know to accomplish that goal.

Save for Your Down Payment

Your down payment is a big chunk of what you pay up front for your home. For most home purchases, buyers put down some amount of cash up front (a down payment) and then take out a loan (a mortgage) to pay for the rest.

It’s a longstanding myth that you need to pay 20% of the purchase price for your down payment. In reality, 20% down isn’t always required. In fact, according to your local Realtor Steven "RedBeard" Vertz, the average buyer puts down way less.  The National Association of Realtors (NAR) also states that today’s median down payment is 14% for the average buyer and just 6% for a first-time buyer.

Regardless of how much money you can save for your down payment, know there’s help available. A local lender (and Steven knows the best in the area) can show you options to help you get closer to your down payment goal. Plus, there are even loan types, like first time home buyer conventional loans that may only require a 3% or 5% down payment, WHEDA (Wisconsin Housing and Economic Development Authority), with 0% down payments, FHA loans, with down payments as low as 3.5% for some buyers, as well as options like VA loans and USDA loans with no down payment requirements for qualified applicants.

Beyond assistance programs and different loan types, here are a few other tips to help you as you save for your down payment:

• Remember to factor in closing costs. In addition to your down payment, closing costs are usually 2-5% of the home's purchase price, and Steven often sees around that 3% give or take.
• Maintain your savings. Your down payment shouldn’t deplete all your savings. It’s important to still have some money set aside for homeownership expenses after you move in.
• Explore your options and lean on your trusted advisor for expert guidance. Do your research, ask questions, and look into the resources available for buyers like you.

Improve Your Credit Score

Your credit score is a number that indicates how financially reliable you are to lenders. A higher credit score usually means you’ll be able to borrow more money at a better interest rate. If your credit score is preventing you from getting an affordable mortgage, there are steps you can take to improve it, and clean up your credit report. Here are two:

• Pay your bills on time. When you pay your bills on time, your credit score improves. When you’re late, it takes a hit. One way to make paying your bills on time easier? Set up automatic payments when and where you can.
• Mix it up. From auto loans, to credit cards, to mortgages – there are several different types of credit. And having a mix of them improves your credit score.

Bottom Line

If you want to purchase a home this year, let’s connect so we can start preparing.

Steven "RedBeard" Vertz

The Largest Beard in Real Estate aka The Wizard of Real Estate

Owner/Operator, Managing Broker, Realtor, Real Estate Agent, Author

Wizards of Real Estate LLC

(920) 209-1079