So after thinking it through and deciding if now is the right time you feel you’re ready to take the leap from being a renter to a homeowner. But a quick look at your finances shows that it just isn’t in the cards, at least not yet. Buying a home will be one of the most expensive decisions of your life, especially in a place like New York. You’ll need at least enough to cover a down payment and if you want a good interest rate you should aim for no less than 20%. If that looks out of reach now, then adopting a few useful habits now could make it a reality in 2019.
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The market in NYC currently favors buyers so the sooner you can reach your financial goals the better position you’ll be in. Here are four habits you can start right now if you want to buy an NYC home in 2019.
Set up a savings account as your “house fund”
The recommended 20% down payment you’ll need to secure a mortgage with the best rates call for some serious saving. For an $800,000 home that’s $160,000, you’ll need in the bank. Unless you’re expecting a hefty inheritance or a winning lottery ticket to fall in your hands then you better start saving sooner rather than later. Most people dramatically underestimate their down payment so try not to be too conservative in how much you think you’ll need.
A quick way to start saving now is to automate your checking account to set aside a small percentage of your paycheck into a separate account as your home fund. You now have an easy way to predict how much you’ll have saved by a certain time. You’ll also want to have a certain amount set aside for any maintenance or unexpected repairs needed after the sale. Maintaining this takes discipline so remind yourself of its importance every day.
Start building a clean credit history
Even with that down payment saved you’ll still need to secure a mortgage. Lenders like to see a good income and savings in the bank but they can still deny you a mortgage if your credit history is bad. Stay on top of all your college loans and credit cards and if you’re behind aim to get caught up as fast as you can. But don’t mistake a clean credit history for an empty credit history. Without any loans, you won’t have a credit history or any way to prove you can (or can’t) keep up with payments. In short, pay your bills. If you also need to rebuild your credit score, then start taking steps towards that end as well. Those with a credit score above 700 will qualify for the lowest rates while the very lowest is available for those above 750.
Start budgeting your lifestyle
Want to increase the amount you can put away each month in your house fund? Then start cutting costs and following a strict budget. Make a list of all your current expenses and look for areas you can cut or completely eliminate. Aim to adopt a more conscious approach to spending. If you’re used to eating out once a week then reduce that to once a fortnight and eventually once a month. For example, you could swap your gym membership for some weights and good running shoes. Or look into potential renegotiations on mobile, internet or utility contracts. If you want to take it a step further, sell your car and put the proceeds straight into your house fund.
Start researching the market and what you can afford
The housing market rewards preparation so make studying it your new hobby. If you already know what neighborhood you’re interested in, then stay informed about current prices and any new developments that could change the market value. Also, check up on other potential neighborhoods to buy in. it’s more likely that the market rather than your personal preferences will dictate your choices. The better the sense you have of market prices and local amenities the easier it is to predict what you can afford. That way you can avoid disappointment when it comes time to start home hunting.