Do These Four Things if You Want to Buy in 2023
1. Save Your Down Payment + Closing Costs
Listen up! I want you to know this! Gone are the days of putting 20% down on your first home. You certainly can, but I want you to know that first-time home buyers in Texas can put down as little as 3% and the median down payment for first-time buyers is 6%.
While you are saving your down payment, you will also want to start saving for your closing costs. Closing costs consist of all involved parties’ fees to transact the loan. These include title fees, lender fees, appraiser fees, surveyor fees, & county fees. Plan for your closing costs to be around 3% of your sales price. It usually comes out to less than 3%, but aim to save 3% to be on the safe side.
That means if you want to put 6% down on a $600,000 home, you will want to save $36,000 for your down payment and $18,000 for your closing costs for a total of $54,000.
2. Work on Your Credit
When you are applying for a mortgage, your credit score is super important! Your lender will consider your debt-to-income ratio and your credit score when determining how much you can borrow. In the mortgage world, any score above a 740 is considered a perfect score. So, that is the gold standard to aim for! If you’re above 700, you can qualify for a conventional mortgage and the rates will be a little better. Also, be sure to keep tabs on your score by utilizing an app like Credit Karma or monthly score updates through your bank.
Here are a few ways to increase your credit score:
Don’t close or open any new accounts.
Lower your overall credit utilization.
Pay your bills on time.
3. Prioritize Your Wants and Needs
Create a list of desired features and categorize them as Must-Haves or Nice-To-Haves to determine what’s essential. For example, three bedrooms may be a Must-Have, where a pool may be a Nice-To-Have. I think it’s also important during this phase to consider if you are wanting a home that is totally move-in ready, if you’re open to cosmetic updates, or if you are open to major renovations. This will be something we want to keep in mind when considering your budget!
4. Call Me
If you think you are going to be interested in buying in the next year, or even two, let’s talk! There is nothing I love more than sitting down over a cup of coffee and mapping out a game plan to get you to homeownership!
