What Do Successful Home Buyers Have in Common? Five Traits to Emulate
As we turn a new leaf into a new year, have you set your resolutions yet? Maybe 2019 is the year you read more books, exercise more routinely or finally start that novel you’ve been putting off writing. Or, perhaps this is the year you buy your first home.
While the idea sounds promising, it takes more than hopes and wishes to obtain a property. Rather, there are several habits that successful buyers put into practice well before they sign a contract or hire a real estate agent.
Today, we’re taking a look at a few of those habits, then sharing how you can implement them in your own lives to get you that much closer to owning the home of your dreams. Some are steps you’ll take daily, and others are on a less consistent basis. Yet, added together, they accumulate into a routine that’s designed to help you save money and take major steps toward your goal. Let’s take a look.
1. They’re willing to sacrifice a few luxuries.
Being able to afford a 20% down payment is an important step in the home-buying process. Doing so helps you avoid having to pay private mortgage insurance. Yet, to get there, you may need to rethink your budget and find any areas in which you’re overspending on unnecessary items.
This isn’t to say that it’s time to cut cable, cancel your subscriptions and vow to never eat at a restaurant ever again. Yet, there may be common indulgences, such as that bi-weekly $5 coffee, that you can do without in your effort to stockpile as much as possible before you sign on the dotted line.
2. They pay themselves routinely.
Even if you vow to save as much money as possible, there will inevitably be something that comes up that demands the extra cash. Your car might need repairs, your children’s preschool tuition is suddenly due, and you’re strapped for funds. So, you dig into your savings.
To ensure the money you’re socking away for your home is protected, consider setting up a separate “Future Home” savings account at your bank. Every time a paycheck comes in, try to add a set amount of money into this account and vow to remain consistent and on track with this process.
3. They look at the costs realistically.
Of course, the most expensive aspect of buying a home is applying the down payment. Yet, there are also other costs to be aware of, such as buyer’s agent commission fees, which are explained more in this article.
Then, once you walk away with the keys to your new place, the spending ramps up. You’ll have a mortgage due every month along with homeowner’s insurance, maintenance and repair costs, neighborhood/community dues and more.
Successful buyers make sure they’re ready to take on these expenses before they agree to buy a property. To do so, they set aside how much money they expect to spend on regular housing expenses. From there, they allow around 10% as an emergency fund. From there, they run the numbers and determine if this budget is realistic.
Especially when you’re buying your first home, it can be easy to ignore the dollar signs and focus on amenities, upgrades, features and finishes. Yet, knowing that you’re truly able to afford the homes you’re touring is critical. Otherwise, you’re spending your time unwisely and could be better served by re-running the numbers until you get to the one you’re comfortable with.
4. They pay their bills on time.
Want to get a great interest rate on your 30-year mortgage? You’ll need to have a great credit score first. While there are some conditions, such as paying on student loans, that can drive your score down without any negative activity on your end, there may be other aspects that are entirely within your control.
To start, pay all of your bills on time when they are received. Failing to do so will work against you score-wise and can make lenders uncomfortable to work with you. This is especially critical if you’re paying on an auto loan or lease, as this is often the first places that lenders check.
If you don’t think you can keep up with paper-based payments, most companies will allow you to automatically draft the expense from your checking account each month.
5. They work the local market.
Informed buyers know the local market like the back of their hand. They’ve attended open houses and similar showcases and they know what they’re looking for. Yet, it never hurts to get a little more input.
Speak to local homeowners’ associations near you. Contact nearby property managers, landlords and residents alike. Learn what makes a particular community a great place to live and which have their pain points. Determine which properties are selling for what price, and what this points to for the market as a whole.
Finding Your Footing as a New Homeowner
As you seek to put steps into place that ultimately lead to your new front door, don’t go into the process blindly. Rather, seek to learn as much as possible, make strategic connections and focus on your personal finances.
By doing so, you’ll set yourself up for a successful home buying experience. Then, you can turn around and help another novice buyer do the same thing. This list of shared traits isn’t inclusive, but it’s a smart place to start.