5 habits to start now if you hope to buy a home in 2017

If buying a new home is on your list of goals for the New Year, then it’s time to start preparing and planning to get a head start on the home buying process! This recent Realtor.com article by Cathie Ericson, shares 5 habits you can start now if you’re planning to buy a home in 2017.

Habit No. 1: Automate your down payment savings

If you’re trying to squirrel away the recommended 20% down payment, that works out to about $40,000 for a $200,000 home. That’s a huge chunk of cash, so unless you’ve been the recipient of an inheritance or have recently won the lottery, you can never save too early or too much.

“The down payment takes more money than 99% of people plan for,” warns Joshua Jarvis of Jarvis Team Realty with Keller Williams Realty Atlanta Partners in Duluth, GA.

Yet one practically painless way to get started is to automate your checking account to regularly set aside a small amount of your paycheck into a separate savings account dubbed your “house fund.”

“Amassing enough for a down payment takes discipline and perseverance, but setting up automatic savings can make it easier,” points out Realtor® Marcia Goodman with Re/Max Gateway in Gainesville, VA. “If you never see the cash, you won’t spend it.”

And you don’t have to put down the full 20%, either—there are other options. But it’s best to save as much as you can.

Habit No. 2: Build your credit history and keep it clean

Keep your credit score in check.AndreyPopov/iStock

To get a mortgage, lenders will want to see evidence that you’ve paid off past debts. As such, keeping on top of your credit cards ad car and college loans is a crucial mortgage must-do.

But don’t steer clear of credit altogether. If you’ve never had a credit card or a bank loan, you won’t have a credit history. Once you have credit established, keep it pristine. Pay all your bills on time—this cannot be overemphasized.

“I had a client who made $250,000 a year and was denied a mortgage because his credit card payments were always late,” says Alexandra Axsen, managing broker of Lake Okanagan Realty Ltd. in Kelowna, BC.

Dean Sioukas, founder of Magilla Loans in Sacramento, CA, also advises not using more than 30% of your available credit, as recommended by the credit bureaus.

Habit No. 3: Practice living on a budget

Think owning a home is pricier than renting? Not necessarily—it depends on your area, so make sure to compare the costs of renting vs. buying near you. But if you expect your mortgage to take a bigger bite than your rent, create a budget that factors in your new reality so you can get used to living on less disposable income, suggests Kevin Lawton of Coldwell Banker Schiavone & Associates in Yardville, NJ.

Downsizing your budget early also means you’ll be able to save more for your down payment, pay down debt, or save for furniture for your new home.