Welcome to 2019! Resolving to eat more kale and take the stairs are fine resolutions. But if this is the year you vow to buy a home, we'd love to suggest a few new habits to help you get there.
Here's a breakdown of home-buying habits to adopt now, especially if you hope to start looking once home-buying season is in full swing come spring. These behaviors are things you can do daily, weekly, monthly, or even just yearly. Taken together, they set you well on the path to homeownership with a minimum of pain and suffering.
1. Daily: Ditch an indulgence or two
Excuse us for stating the obvious—but saving for a down payment is vital to a successful house purchase. And buyers who can put down 20% don’t have to pay private mortgage insurance. Getting to that 20% down payment is a goal achieved by spending less.
Daily habits you may want to adopt now include eating out less often, cutting the cable bill, canceling (or downgrading) the gym membership, forgoing expensive coffee, and making your own lunch every day, says Patricia Vosburgh of NextHome Gulf to Bay in St. Petersburg, FL. And it's not just about skipping $4 coffee—buyers shouldn't make big purchases either.
"If you have an expensive car payment, consider selling the car or turning in the lease," says Vosburgh. "Buy a beater car for the time being, or use public transportation."
2. Weekly: Make deposits into a 'home savings' account
"When I was young and newly married, I couldn’t afford to buy an apartment or a house," says Dolly Hertz, licensed associate real estate broker at New York's Engels & Volkers. So she opened a designated "home savings" account, and she and her husband got into the habit of depositing a set weekly amount.
"Soon we had a tidy amount for a down payment," says Kullen. To meet their goal sooner, Kullen kept her starter home aspirations modest, which enabled her to get approved easily by the bank.
3. Weekly: Start attending open houses
Getting into the habit of attending open houses will not only give you a feel for what homes are available, but seeing homes that could be yours will also help motivate you to save.
"And it will educate you on the market," says Marie Bromberg, a sales agent with Compass in Brooklyn. "Every buyer at the back of their mind is thinking 'Is now a good time to buy?' Once you observe firsthand what houses are selling for what, it will help settle this question in your mind."
4. Monthly: Do a trial run at homeownership
Owning a home is more than just coming up with a 20% down payment. You also have to be able to pay the mortgage and home maintenance costs.
"Think lawn care, general maintenance, replacing mechanicals, and unexpected repairs," says Shawn Breyer of Atlanta's Breyer Home Buyers.
To make sure you won't max yourself out, test out the habit of saving as a homeowner. For one month, set aside the anticipated amount of your monthly housing expenses and what you'd need for an emergency fund. (A good rule of thumb is to save 10% of your mortgage amount every month for maintenance fees. So if your payment is $1,200, sock away $120.) Then see if you can live within your new budget.
This will allow you to test your lifestyle before committing to buying, says Nick Oliver, principal broker at New York's HomeDax Real Estate. If you can't live within the budget, you'll know to opt for a smaller home.
5. Monthly: Pay all bills on time
To qualify for a mortgage at a reasonable interest rate, you'll need a credit score that is in the 600s at the very least. The best way to keep your score high is to be in the habit of paying every single bill on time. Timely payments are especially important for auto loans and leases, since mortgage lenders look there first when checking reliability. Lest you forget, set bills on automatic payment.
Bills includes your rent, too. Remember, when you’re going into a home purchase, you sometimes need a referral from your landlord. Whether your rent check arrived on the first or the 15th of the month matters. And don't forget about medical bills, which stay on your credit score for seven years if late or unpaid, says Hertz.
Finally, always pay down credit cards with any extra cash you have at the end of the month.
6. Yearly: Check your credit report
Do you even know what your credit score is, or even laid eyes on your credit report? If not—or if you haven't done so recently—now's the time to check.
To get a free copy of your credit score, go to CreditKarma.com. For your full credit report, available for free once a year, go to AnnualCreditReport.com. Who knows, there may be things on that report you weren't aware of that are hurting your score—the only way to know and nip these problems in the bud is to check.