New Year’s resolutions don’t only apply to wellness. They can go beyond promises to eat better, cut back on bad habits and read at least one book per month.
The annual list of goals can be narrowed down to another topic – like, for example, buying a house. Preparation is key for this endeavor, as the market is not expected to be easy for buyers to navigate in 2020.
At least 8.3 million first-time homebuyers will enter the market by 2022, according to a report from the credit bureau TransUnion. However, between a lack of new development in the starter-home sector, and Boomers opting to stay put in their houses, available inventory in the United States is expected to hit a historic low.
Meanwhile, though the national median sales price was $315,000 as of May, according to Realtor.com, numbers in some major cities dwarf that figure. The median sales price in the third quarter of 2019 was $1.58 million in San Francisco, Sotheby’s International Realty reported, and $1.66 million in New York, Douglas Elliman found.
There’s good news too, however. Mortgage rates averaged 3.9% this year, the fourth lowest annual level since 1971, according to Freddie Mac. To become the best buyer you can be this year, here are five New Year’s resolutions suggested by agents working in Ground Zero of the national housing market – New York City.
1. Save for a down payment
Depending on the loan you want to qualify for, you’ll want to save at least 3 to 20% for your down payment, and will probably have to cover another 1 to 3% for closing costs. “A New Years resolution should be how to come up with this amount in 12 t0 24 months, with 12 months ideal,” says Martin Eiden, a broker with Compass. To put away as much as $500 to $1,000 per month, try methods like trading down to a cheaper car or picking up a side job, he suggests. “Cut back and work more … that’s how to get ahead,” Eiden says.
2. Organize your finances
You’ll need a thorough understanding of your income and expenses to embark on the home-buying process. This is partially because you’ll likely need to be preapproved for a loan by a lender before you can go house shopping. A preapproval letter provides an estimate on how much you can spend. “Before strolling through an open house or making appointments to see apartments with your agent, you’ll want to speak with a lender and get a preapproval letter in order to know what you can afford,” explains Becki Danchik, an agent with Warburg Realty. Before you contact a lender, she adds, you’ll need to put together a list of financial information, including:
- Your monthly income
- The sum of your total monthly debt payments (auto loans, student loans, and credit card minimum payments)
- Your credit score and any credit issues in the past few years
- How much cash you can put down
3. Find a real estate agent
“I recommend that you secure a real estate agent as soon as it even crosses your mind that you want to buy a home,” says Warburg’s Rebecca Blacker. Though some agents request that buyers receive a mortgage preapproval letter before enlisting their help, Blacker likes to meet with potential clients early on so she can help as much as possible. “Purchasing a home is most likely the biggest investment you will ever make and it is so important to have a real estate adviser from day one, walking you through and educating you on the buying process from A to Z,” she says.
“I will choose my Realtor wisely,” is the resolution recommended by Nancy Strong, a Douglas Elliman agent in Westchester. Once you do find the right fit, believe what the agent tells you, she adds. For example, “take your Realtors’ recommendations on attorneys, mortgage professionals and inspectors,” she says. “They have gone through this process more than you, your family members, your friends or your service providers.”
4. Act quickly
“If a buyer sees something perfect, chances are other buyers think it is perfect too,” warns Lisa Camillieri, of Warburg. “Don’t hesitate in making an offer if you think there is a chance you could lose a particular property that you have fallen in love with.”
5. Have some fun
Remember to lighten the pressure as much as you can, as buying a home is an exciting time and you’ll want to remember the process fondly. “Enjoy yourself, because it should be fun,” explains Kathleen Perkins, a Douglas Elliman agent in Brooklyn. One way to be a little adventurous is to take excursions to neighborhoods you’re interested in, she says – walk around, get something to eat, and see what it’s like there during the daytime and the evening.