We’re approaching the end of 2020 which means pretty soon it will be time for New Years resolutions and goal setting.
In this article, we’ll explore what SMART goals are, and look at how you can use them to pursue your dream of homeownership. Sometimes goals with the best intentions are not met because they haven’t been properly defined or they are too broad to track measurable results that keep you motivated. When applying the SMART model, each goal is:
- Specific (specific and narrow for effective planning).
- Measurable (define what evidence will indicate progress).
- Achievable (attainable).
- Relevant (aligns with your values and long-term objectives).
- Time bound (time-based, time limited).
So let’s start with the goal of purchasing a home in 6 months.
Is it specific? Yes. However it may not be narrow enough. You may need to set short-term SMART goals first, but let’s continue with this example for now.
It’s measurable considering your results would be receiving the keys to your dream home.
Is it attainable? You may need to check with a mortgage lender to determine that your credit and financial picture will allow you to purchase in a reasonable time-frame.
Your goal of purchasing a home is also relevant if your long-term objectives are to gain financial independence or provide a home for your family.
This goal also is time-bound since we indicated a 6 month time-frame.
Using the SMART Goal Model for Short- Term Goals That are More Specific
In a perfect scenario the above goal of buying a home in 6 months would check all the boxes for a specific, measurable, achievable, relevant and time-bound goal.
However you may find that purchasing a home is not attainable in a 6 month period until you meet other goals that are more specific.
You may need to pay off some debt first to improve your DTI ratio or improve your credit score, and that’s okay. The key is to apply SMART goals to achieve those specific objectives. In fact, it’s specific, short-term goals that work best with the SMART model.
For example, let’s break down the following goal:
I will pay off 2 credit cards in 4 months in order to reduce debt and improve my credit card utilization.
Specific – This goal is very specific. Instead of stating you will decrease debt in 4 months, the goal states exactly what you will do, pay off 2 credit cards.
Measurable – You can track progress by committing to pay a certain dollar amount every month and hold yourself accountable.
Attainable – Your budget allows for you to comfortably pay more each month and you will cancel unused subscriptions to contribute even more money.
Relevant – The goal is relevant to your overall objective of improving your financial picture to buy a home.
Time-bound – There is a time limit of 4 months to pay off credit card debt.
Use this model for other specific goals that pertain to homeownership. Instead of saying, “I will save a down payment”, what will you specifically do to increase savings and how much will you save? You will find that setting SMART goals will bring you success and in turn, keep you motivated for the next target!
About Metro Detroit Lender, Julie Krumholz
Julie Krumholz, is an FHA lender at Superior National Bank in Rochester, Michigan. With over 35 years in the mortgage industry, Julie’s goal is to provide the best possible mortgage experience and the most competitive rates. Julie has vast experience in FHA loans, VA Loans, USDA loans, portfolio loans, MSHDA loans and more.
