Your were partying on New Years Eve — and that’s okay
January is well underway, and you forgot to make your resolutions. But it’s not too late. Better yet, why not make 2018 mortgage real estate resolutions that will help you buy a home quicker?
Setting goals can help. By pinpointing your aims and pursuing strategies to attain them, you stand a better chance of reaching your targets.
First-time home buyers guide: the basics
Pledges are often broken, though; you’ll need discipline. Sacrifices are required. Expect a few setbacks along the way, too.
Remember: actions speak louder than words. Committing to objectives is a good first step. But following through on them will take a lot of effort and patience. Knowing that a home of your own is waiting at the finish line makes it all worth it.
Why 2018 mortgage goal-setting is important
Mark Lee Levine, professor at the Burns School of Real Estate and Construction Management, University of Denver, says it’s human nature to delay our dreams.
“As is true with much of what we do, we procrastinate,” says Levine. “And with a large purchase and many issues to address, it is much easier to put it off for another day.”
This is why setting goals and devising a plan to achieve them is crucial. But the goals we set have to be specific, realistic and taken seriously.
Don’t just list it — schedule it
“Goals must be important to us for reasons we can clearly identify and that have immediate bearing,” says Alex Stajkovic, assistant professor of management and human resources at the Wisconsin School of Business.
“Having a resolution to keep your weight in check because it’s generally good is one thing. Being told by a physician that your weight may soon lead to a stroke is another.”
The key to whatever goal you set is commitment and taking practical steps to fulfill them, Stajkovic adds. That means, instead of resolving to “save money,” make it, “I will have $25 a week deducted from my check into a home savings account.”
Be precise and inspirational
For best results, be particular.
“The goals you set should be specific,” says Stajkovic.
How long does it take to save a down payment?
For example, set a first goal of having a 20 percent down payment saved by September 1. And, set a second goal of moving into your first home before New Year’s day.
Stretch; don’t snap
“Goals must be challenging, yet achievable,” Stajkovic notes. “Easy goals are not motivating. And goals perceived to be beyond your ability may decrease your effort.”
Goals should indicate deadlines, too. But keep in mind that “ Having insufficient time raises goal difficulty, and having too much time kills motivation,” he adds.
5 ways to borrow the mortgage down payment for your home
Also, avoid open-ended and overly general goals, such as “I want to own a home.” These direct insufficient attention toward an identifiable end, says Stajkovic.
Subgoal 1 -- credit
Setting home-buying goals is the easy part. The real work involves achieving them. To help, you’ll need to set and fulfill smaller goals.
First, work to improve your credit.
“Rather than set a credit score target, review your credit score and identify actions you can take to raise that number,” says Kevin J. Boyle, professor and director of the Program in Real Estate at Virginia Tech.
5 ways to raise your credit score today
Also, “request that any incorrect reporting be removed from your credit report. Pay down your credit cards and any outstanding debt to improve your score quicker. And avoid being late with payments.”
Keith Baker, Mortgage Banking Program coordinator and faculty at North Lake College, agrees that improving your credit score should be an essential goal.
“A higher credit score makes it easier to qualify for a mortgage. And the higher your credit score, the lower your mortgage interest rate,” says Baker.
Subgoal 2 -- savings
Second, prepare to set money aside on a consistent basis, says Boyle.
“For example, have money from each paycheck automatically go to a separate account that you don’t use for other purposes,” Boyle says. “Set a sensible savings target for each pay period. Start as soon as possible and aim for a realistic amount you can live without. It should be sufficient to build toward your down payment.”
Complete guide to down payment assistance in the USA
To motivate you, learn what your mortgage payment would be versus any rent paid now. And start saving the difference.
“This will help you will quickly understand how your spending habits will have to change when you purchase and finance a home,” Baker says. “Also, prepare to save up for closing cost expenses. Most first-time buyers underestimate how much it costs to close a home loan.”
More tips -- do them!
Consider making these real estate resolutions as well:
- Write down your goals on paper. “If the specific steps to be accomplished and the timetables to meet these tasks are not written down, it’s likely that 2018 will come and go—without the home purchase that was desired,” adds Levine.
- Assemble a team. That means choosing an experienced agent or broker and picking a lender. “Meet with these experts and develop a plan,” says Levine.
- Set dates and stick to them. “Outline a table of key dates and objectives. This can include getting prequalified for a loan by a given date. And making plans to visit a minimum number of homes for sale by a given date,” Levine recommends.
- Use paper and online calendars to schedule these goals and steps. Create electronic reminders to keep you on pace. “It’s important for buyers to have a constant reminder of these timing issues,” Levine says.
- Create a plan B. “This could be a commitment to put aside a given amount of money each month until your purchase is met,” suggests Levine.
- Don’t give up. “If you cannot meet your target, adjust your expectations,” says Boyle. “Reduce the amount you are saving. And perhaps reconsider the target home purchase price.”
Creating and sticking to your plan should make homeownership possible for you. But the best-laid plans can derail — medical emergencies, job losses, a new addition to the family — can occur. So an emergency fund should be part of your plans. But more important, even if you miss a deadline, you made progress — that puts you a step closer and is something to be proud of.
What are today’s mortgage rates?
As of this writing, some minor inflation has squeezed into financial markets. That’s especially true of oil prices. However, mortgages are still extremely affordable (after all, a .125 percent increase to a 4 percent rate on a $100,000 loan adds exactly $7.23 a month to a payment.