Is your New Year’s resolution to become a homeowner? You’ve come to the right place. Many people are making plans and taking steps toward the goal of homeownership this year. So, why become a homeowner? Maybe it’s to get your slice of the American Dream. Or, because real estate appreciates and there’s money in that. Or, perhaps, for the tax advantages. Or maybe, you just want a place to call your own. A place you can call home. There’s something beautiful about homeownership and Americans know that. You know that. It’s probably why you made a resolution to become a homeowner this year. So, how do you actually buy that home? SMART goals for buying a house can help. What exactly is a SMART goal? It’s a specific way to make a plan for reaching your target. So long, broken New Year’s resolutions!
SMART Goals for Buying a House
Ever try to put furniture together without the instruction manual? Might have worked out. But, it just as likely ended with a backward side panel on your dresser or wobbly joints on your chair. One thing’s for sure, the process took longer than if you would have just followed the manual.
You can think of SMART goals for buying a house like instructions for making your dreams come true. Take a bit of time to map out your plan of action and your likelihood of success will shoot through the roof (probably the roof of your new house).
Here’s how to do it. Plan out each part of the SMART goal acronym and you’re on your way:
Specific – What Do You Really Want?
Be specific and detailed about what, exactly, you want in a home. Knowing the particulars will help you plan the rest of your SMART goal. We’re not just talking bed and bath combinations—it’s much more than that. Is there a specific town or neighborhood you want to live in? Do you want some outdoor space? What about a dine-in kitchen? Or a dual vanity in the bathroom? Think critically about your lifestyle, your finances, and how your current place is or isn’t working for you. Then, map out your wants vs. needs.
Specific – I plan to buy a 2-bedroom home with a gated yard (for Buster, of course) and a work commute under 30 minutes.
Not Specific – I plan to buy a house.
Measurable – Get to Know Your Finances
One of the most powerful tools for success? Measurement. If you want to become a better long-distance runner, you’d track your mileage gains over time. The same is true for your SMART goals for buying a house. Measuring your progress is key (to your future front door).
Start by taking stock of your current credit score, existing debts, and savings for a down payment. From there, you can set measurement milestones. Consider picking one area of focus that could be most impactful to your home purchase. Don’t have a down payment accruing? That could be your 2022 focus. Think your student loans might seriously hinder your borrowing power? Commit to increasing your monthly payment (reduce the amount owed) by a set amount. Worried your credit won’t qualify you for a mortgage? Make a detailed plan to pay down your balance.
Measurable – I will save an additional $10,000 for my down payment by scheduling a monthly auto-deposit of $833.33 into my savings account.
Not Specific – I will save for my down payment.
Expert Tip: Not sure which financial factor to focus on? Reach out to a mortgage professional for a free home loan evaluation. They can help guide your goal-setting.
Achievable – What Can You Afford and When?
As far as we’re concerned, the A should come first. But, we guess ASMRT doesn’t roll off the tongue quite as well (try saying it – it isn’t pretty). This essential step exists to ensure you can accomplish your goal. Say you don’t have a down payment saved, but you’ll need at least 3% of the home’s value to qualify for a mortgage. Can you truly swing the monthly savings required to make that happen? Same goes for timing. When you think through all the details, does it really make sense to buy a home in 2022? If even one of your answers is, “no,” the S, M, R, and T don’t matter at all.
Relevant – Homeownership in Context
It’s worth considering your short-term plans and your long-term vision for your life. The “relevance” step of SMART goals for buying a house establishes where homeownership fits in. Is traveling the world a priority in the coming years? Well, wanderlust might push buying a place to the backburner. Committed to starting – or expanding – your family soon? Then, homeownership is about as relevant as it gets.
You don’t want to pull yourself (or your finances) in too many directions. One huge direction is enough, thank you very much.
Time-Based – When Can You Start Shopping?
You’ve been planning to organize your junk drawer for years. Somehow, the task always seems to get tucked under other, more appealing, time commitments. And that new exercise routine… starting it in 2023? Us too.
The problem isn’t that cleaning a drawer or exercising are unreachable goals. It’s just that you probably haven’t established a timeline for either. Time-stamped milestones can have a mansion-sized impact on making your homeownership dream happen.
Expert Tip: Don’t stop at setting your house-purchase date. Define deadlines for each step of your goal. Even better? Add each milestone to your calendar.
- I will narrow down my search area to 5 neighborhoods by March.
- I will find a real estate agent and mortgage professional by April.
- I will improve my credit score by August.
- I will establish my home budget by September.
- I will start house hunting by October.
- I will own a home by December of 2022.
Less Time-driven – I will buy a house this year.
Making Your SMART Goal Happen
It turns out that SMART goals are more than smart. They identify crucial aspects of goal-setting and scaffold your success. Who’d have thought you’d become the author of your very own instruction manual? It’s time to do this home buying thing.
You can think of SMART goals for buying a house like instructions for making your dreams come true.