It is probably safe to say that 2020 turned out different than everyone expected. This time last year, many of us were scribbling new year resolutions to improve ourselves and our lives. Some of us committed to reading more books, exercising more, or even learning a new language. However, 2020 threw us a curveball in the form of a global pandemic that has killed over 340,000 people and left millions unemployed. Needless to say, many of us were just struggling to get by and many of our resolutions fell by the wayside. However, 2020 is almost done and it is time to set resolutions for 2021. For some, that means taking advantage of historically low mortgage rates and buying a new home. If this applies to you, then the team at Peoples Choice Mortgage have the perfect resolutions to help you buy a new home in 2021. 

Get Pre-Qualified for a Mortgage

If buying a new home is one of your goals for 2021, then you should try to get pre-qualified right away. Seeing if you can get pre-qualified for a mortgage is simple and quick. If you do get pre-qualified, then it will help you set your budget for your home search. It will let you know exactly what you can afford in a new home and will prevent you from falling in love with a home that is too expensive. Even if you cannot get pre-qualified for a home, then it will let you know where you stand. This way you can take concrete steps to improve your financial situation so that you will be able to get a mortgage before you know it. 

Pursue Credit Enhancement Strategies

Even if you are able to pre-qualify for a mortgage right now, it is always good to enhance your credit. Your credit score will greatly impact your ability to buy a new home in 2021. The higher your credit score, the more types of loan options you have to choose from. Even better, higher credit scores make it more likely that you will be able to get very favorable rates for your mortgage. Simple things you can do to enhance your credit include paying down credit card balances and removing negative marks from your record. 

If you want more details on how to enhance your credit, speak with your trusted mortgage broker. They have access to your credit history and can tell you what to do to make the most impact on your credit score. Also, you do not need perfect credit to qualify for a mortgage. Some loans, such as FHA loans or VA loans will let you qualify with a credit score in the 600s or lower. Your mortgage broker can help you see if you qualify for these loans. Don’t assume you won’t qualify for a mortgage because of your existing credit. Experienced independent brokers work with lots of lenders who all have different qualification requirements. 

Save for a Down Payment

One of the big hurdles for people who want to buy a new home is having the money for a down payment. How much you need depends on what types of loans you qualify for and what type of house you are looking for. Many people falsely believe that you need 20% of the home’s cost for a down payment. This is not true. All lenders have different requirements and some loans, such as VA loans or USDA loans require very small down payments or none at all. Again, speaking with your mortgage broker can help you figure out what you need in order to get the home of your dreams. 

Budget for Mortgage Payments

Being able to afford a home is more than just being able to afford a down payment. You also need to make sure that you can afford your monthly payments. How much you need to budget for depends on a lot of variables. Monthly payments change based on whether or not you get a 30-year mortgage or a 15-year mortgage. Your monthly payment can also fluctuate if you get an Adjustable Rate Mortgage. It also changes depending on how large of a down payment you make. You will know much more about what you need each month for your budget based upon what happens with your pre-qualification. Your independent mortgage broker will also be able to walk you through this important step. Do not put yourself in a position to not be able to afford your monthly payment. Falling behind on your payments can lead to forbearance or even foreclosure. 

Get a Trusted Realtor

Hiring an experienced realtor that is educated in the nuances of our market is incredibly important. Today’s home buying environment is very competitive. Today’s historically low mortgage rates and the low inventory of homes mean that most houses are receiving multiple bids. You need an experienced real estate professional to help you navigate this reality. They will help you find homes that fit your budget and they will set you up with the tools you need to win a bidding war. If you currently own a home then they will also be able to help you sell it for more than your asking prices. Like mortgage brokers, not all realtors are created equal. Make sure you turn to a trusted professional that will make the home buying process as easy as possible. 

Get a Trusted Mortgage Broker

Finding an independent mortgage broker is the most important resolution you can make and keep for buying a new home in 2021. Many people assume that the first person you should speak with is a realtor. However, getting a mortgage broker should come first. They will help you figure out if you can qualify for a mortgage, which will help you set your budget for your home search. 

There are a lot of different ways to get a mortgage. You can go through your bank or you can go through online mortgage providers. Independent mortgage brokers offer you advantages over both of them. You might like the idea of working with a bank because it gives you one point of contact and they’re right around the corner. However, independent brokers work with hundreds of lenders, which gives you many more options of finding the loan product perfect for you. This will give you a better chance at finding a lower rate and easier qualification standards. 

Large online mortgage providers might seem attractive because they let you apply to lots of different lenders all online. However, independent mortgage brokers give you this same benefit, but allow you to only speak to one person. These large online services will leave your phone ringing and your inbox piling up from offers from many different vendors. Working with an independent mortgage broker allows them to be the point of contact for all of the different loan providers. They answer your phone calls and your emails for you. All you have to do is talk to them. 

Final Thoughts

Many aspects of 2020 were very difficult, so it is completely reasonable if you do not check off every resolution on your list. To be honest, we cannot tell you that 2021 will be any easier. The truth is that the pandemic is still with us and getting worse by the day. We also cannot tell you if any other challenges come up next year. However, we can tell you that the dream of owning a home is closer to being a reality than you think. So, if buying a home in 2021 is one of your big goals, then we hope you take our resolutions to heart. The team at Peoples Choice Mortgage wants to wish all of you a happy new year no matter what next year throws at us.