5 Things to Do if You Hope to Buy a Home Before the End of the Year

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Hoping to buy a home in 2021? Here's what to do now.

Buying a home can mean major changes to your life and your money management. While it's often a smart undertaking -- because you can start building equity -- make sure your finances are in order first.

If you hope to become a property owner before the end of 2021, take these crucial steps now to make a smart purchase that you're happy with over the long term.

1. Polish up your key credentials

If you're buying a home, you want to be an attractive customer for the mortgage lender you apply with. Mortgage lenders look at these key things: credit score, income, and current debt level. So work on improving all of these things right away.

It's crucial to check your credit report now if you haven't already. Watch out for errors. And if there's negative information such as a late payment, reach out to creditors to see if you can remove it.

You should also avoid changing jobs if possible, so lenders won't worry about the stability of your income. And consider repaying as much debt as you can to improve your debt-to-income ratio, which lenders consider a crucial financial metric when evaluating your ability to repay your home loan.

2. Save as much as you can for a down payment

A 20% down payment is ideal whenever possible, because you won't pay for mortgage insurance; you can generally qualify for a lower interest rate; you have more choice of lenders; and you lessen your chances of ending up with negative equity (owing more than the value of your home).

Even if you don't think you can save 20% by the end of the year, get serious about growing your down payment account. It's crunch time, so make short-term sacrifices such as cutting discretionary spending out of your budget to bulk up your account before you make an offer.

3. Shop for a home loan

It can take time to find the right mortgage loan, so don't wait. Get quotes from several lenders today, so you can compare what each offers for interest rate and loan terms.

This should give you a good idea of which lender you want to work with, how much you can borrow, and what your loan will cost. You can also start the pre-approval process, which can take several weeks, because you need to provide financial documents for lenders to consider.

4. Research neighborhoods and home prices

Home prices remain high in many parts of the country, so look into where you want to live and whether buying in your chosen area is affordable for you. By starting to look now, you can narrow down your search for the perfect property and increase the odds you'll get an affordable deal that makes buying worthwhile.

5. Interview real estate professionals

Finally, you'll likely want to work with a real estate agent who can help you through the buying process. Start talking to agents now, as it can take time to find someone you feel is a good fit.

With just a few months left in 2021, you don't have time to waste if you're buying a home this year. Start checking these tasks off your to-do list today.

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