How To Make Your Dream of Homeownership a Reality

According to a recent Harris Poll survey, homeownership remains a priority for 8 in 10 Americans, and 28 million Americans plan to buy a home within the next 12 months. While owning a home offers many benefits, achieving this goal can be challenging.

The reality is that not all 28 million Americans who plan to buy a home in the coming year will be able to accomplish that goal. Experts project that around five million homes will be sold in 2023, leaving many potential buyers unable to make a purchase.

In the same survey, respondents were 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," while 30% answered, "My credit score." If you're aiming to buy a home, here's what you need to know to accomplish that goal.

Save for Your Down Payment

The down payment is a significant upfront cost for a home purchase. Most buyers put down some amount of cash upfront and then take out a mortgage to cover the rest of the purchase price.

It is a common myth that you need to pay 20% of the purchase price as a down payment. However, today's median down payment is 14% for the average buyer and just 6% for first-time buyers, according to the National Association of Realtors (NAR).

Regardless of how much you can save for your down payment, help is available. A local lender can show you options to help you get closer to your down payment goal. There are even loan types, like 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.

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

• Factor in closing costs, which are usually 2-5% of the home's purchase price.
• Maintain your savings. Your down payment should not 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 seek expert guidance from a trusted advisor.

Improve Your Credit Score

Your credit score is a crucial factor in determining your eligibility for a mortgage and the interest rate you'll receive. If your credit score is preventing you from getting an affordable mortgage, there are steps you can take to improve it. Here are two:

• Pay your bills on time. When you pay your bills on time, your credit score improves. One way to make paying your bills on time easier is to set up automatic payments when and where you can.
• Mix it up. Having a mix of different types of credit, such as auto loans, credit cards, and mortgages, can improve your credit score.

If you want to purchase a home this year, it's important to build a team of professionals and start preparing. Contact a trusted real estate advisor to help guide you through the process.