One of the most significant ways to build wealth is through homeownership. Due to dramatic increases in property values, the majority of American homeowners have gained more than $100,000 in equity over the last decade.
As NAR Chief Economist Lawrence Yun explains, “A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”
While there are many benefits to buying, some might be scared off or think it’s not possible for them because of competitive markets and soaring home values in recent years. Others are intimidated by the process and don’t know where to start. But with a new year comes new opportunities for growth! If you have a real estate resolution for 2024, here are some things you can start doing now to make your goal a reality.
1. talk to a loan officer well before you want to move
Even if you meticulously track your finances and think you’re in a prime position to buy a home, it’s a good idea to get preapproved well ahead of time. Things could come up that you hadn’t considered, such as not being at your current job long enough or the app you use to track your credit score being very different than what the lender will use. Planning in advance also gives you adequate time to shop interest rates and research different loan options.
2. create a savings game plan
Saving is a given when trying to purchase, but not all savings are created equally. Many people park their money in a traditional savings account when there are far better options. Plenty of financial institutions are offering historically high interest rates on high-yield savings accounts. Your money could be earning over 4% interest compared to traditional savings which average 0.46% APY nationally. You could also consider CDs as long as you have time to let the funds sit. Additionally, Ohioans will soon have another savings option specifically tailored for homebuyers. The Ohio Homebuyer Plus Savings Program will launch in January as a tax-advantaged savings account to use toward down payments and closing costs. Learn more about the program here.
3. research the market
The last few years have been a wild ride in the world of real estate. Some areas are still seeing intense competition while other markets are experiencing downturns or plateaus. Keep a pulse on what’s happening in your area so you know what to expect when it comes time to negotiate.
4. attend open houses
Open houses were on the decline in the early days of COVID, but in many areas they’re now back in full force. Open houses are a great, laidback way to get a feel for what you like. If you’re considering a new build, this is also a good option for narrowing down builders. If you’re working with an agent but attend open houses alone, just make sure to tell the Realtor hosting the open house that you’re already working with someone.
5. educate yourself on down payment assistance
A lot of would-be buyers think homeownership just isn’t in the cards for them due to minimal savings. Many states, Ohio included, offer down payment assistance programs. Ohioans have options for both first time buyers and previous homeowners. Learn more about OHFA grants here.
6. negotiate wisely
Figure out upfront what contract terms are non-negotiable for you. Do you have to move out of your current home by a specific date? Make sure you know when the seller wants to give possession before you get your hopes up on a certain listing. Do you need the seller to pay some of your closing costs? Discuss strategies with your agent to make sure that happens, such as offering a higher purchase price to account for the difference or being flexible on possession. Real estate negotiations are give and take. If you know what’s a must for you in the early stages of the process then you can determine contract terms that allow you to be more accommodating.
7. find a fantastic realtor
Last, but certainly not least, it’s important to have an experienced professional on your side. Your Realtor can help you from the very beginning stages all the way to a successful closing. Make sure you’re working with a trustworthy agent who understands your goals!