Celebrating National Homeownership Month
June is National Homeownership Month, making now a great time to recognize not only those who have accomplished homeownership, but also those working to achieve their goal of becoming homeowners. Being a homeowner is a huge accomplishment and should not go unnoticed. Today, we want to give tips on how you can become a homeowner and also share the advantages of owning your home.
Steps to Buy a Home
There are plenty of things you need to do to not only prepare for homeownership, but to accomplish the goal of owning a home.
Start Saving Now
You might not think much about it years before you plan to buy a home, but you should start saving for a home the second you can. Once the time comes to buy a home, you’ll realize that your savings have paid off and you have enough for a down payment.
Typically, you’ll want to be able to put 20% of the home’s value down. In fact, a lot of lenders require you to have enough money for a 20% down payment. You might be able to find some mortgages that allow you to put down less than this. However, if you have the money saved for more, it could be wise to put down that amount.
If you are a military veteran or active-duty service member, you might not need to put any amount down, thanks to VA loan programs.
Improve Your Credit Score
It can take several years to get your credit score where you want it. There are several factors that help calculate your overall score, including:
- Payment history
- Amounts owed
- Length of credit history
- New credit
- Credit mix
The higher your credit score is, the better interest rates you’ll be offered. When lenders see a high score, they feel more confident that you’ll make payments on time and pay the life of the loan, resulting in them giving you a lower rate.
To improve your credit score, you can do the following:
- Pay your bills on time
- Reduce credit card balances
- Avoid opening too many new accounts
- Monitor your credit report regularly
Set a Realistic Budget
Once it’s time to start looking for your first home, you’ll need to know how much house you can afford. To do this, you can look at any existing debt you have, what your expected income is, and how much you typically spend each month. You’ll then know how much you can afford to spend on a mortgage each month.
Advantages of Owning a Home
Being a homeowner comes with several benefits, including:
- Building equity: Each time you make a mortgage payment, you are increasing your ownership stake. Unlike paying a landlord and gaining nothing from it, you are building your equity whenever you pay your monthly mortgage.
- Property appreciation: Real estate typically increases in value over several years. If you were to move and sell your home, you could sell it for a lot more than what you bought it for, growing your net worth. If you’d like to sell your home for more, you can do several projects that can give you more bang for your buck. Read our blog for a list of home renovations that won’t break the bank.
- Payment predictability: If you choose a fixed-rate mortgage, you always know what your monthly payment is going to be. You can say goodbye to yearly rent increases and enjoy a set price each month.
- Personalization: Have you ever wanted to design your living space how you want to design it, but landlord restrictions are holding you back? When you own a home, you can decorate however you’d like and not worry about having a landlord not approve. You can also have a pet—or even multiple pets!
Most people have the goal of becoming a homeowner someday. Though it might not always feel achievable, there are so many things you can do to reach that goal. Once you achieve your goal of becoming a homeowner, you’ll be able to enjoy the many advantages of being a homeowner—and can even give yourself a nice pat on the back for achieving such a big goal.