The *right* time to buy a home varies incredibly from situation to situation. People, places, and money all heavily weigh into this decision. It’s commonplace to hear things like, “buying a home is one of the most stressful things you’ll do.” And I get it, it's not just a giant financial decision but can also be very emotional. We tend to put a lot of expectations on how things will be and situations will pan out. I often catch myself wandering down the path of how things ought to turn out or how best all the pieces “could” fit together.
I’m not much of an organized type A either, I’m a gut feeling visionary type so when I feel something is right I go with it. Like when I told my partner I was ready to buy a house and he almost fell out of his chair…well, we were moving less than 2 months later. I had no idea how it was going to happen, I was only focused on the end goal. I also knew this was just a starter home, that it would eventually become a rental. AND I was also super duper pooper scooper naive to everything I was signing up for. I have been very lucky that everything has turned out well but there were many opportunities to have royally F’d that one up.
My point being, my purchase wasn’t filled with much emotion. It was a business decision. Now that I am in the field of real estate and my vision for helping my community is more focused, I realize this is an area up for discussion. There are many ways that we can work together to make the process *less* stressful and there are lots of things that you can prepare for ahead of time so that you aren’t overwhelmed when you’re in the thick of it.
Get Organized
Now I know I just said that I am not much of an organization wiz. As I look around my desk right now I’m laughing at all the disarray and papers everywhere. Maybe you are like me and you feel overwhelmed by financial stuff in general. Don’t get down on yourself, we weren’t taught how to do any of this stuff. It took me way too long to get my shit together with my finances but I was able to manage it and I absolutely believe you can too.
The first thing you probably want to know is what your assets are and what your bank accounts are looking like. How much is a typical balance in your checking? Do you have any savings or other investments that could help keep you in the green in the eyes of the loan makers? Ask your bank to send/print you off your bank statements so that you can send them to a mortgage loan officer.
I highly doubt a lot of you have a whole ass 20% to put down on a house either. I don’t say that to be mean, I’m just being realistic. I didn’t have that kind of money when I bought my house either. I barely had enough to cover the closing costs. Which is my next point. Even if you don’t have that kind of money, there are ways around this! My suggestion is to at least have $5-7k locked in from somewhere because at the very least, you WILL need this to buy a home.
Next, you’ll want to have an idea of your debts. This is where things can knock you off your path. If your (big word coming) debt-to-income ratio is too high, you won't get accepted for a loan. That just means that the amount of debt you have is too high for what you are bringing in and you won’t be able to *afford* the responsibilities of home ownership. A mortgage loan officer can help you determine more clearly what your finances are reading and they can also approve or deny you for a loan.
You’ll need to gather some things for this part. W-2s from the last year and taxes from 2 years are at the top of that list. I’ve been asking some loan people if they have run into issues with job loss due to Covid and gaining mortgage loans and they are seeing it some. If you have a great loan person, they may be able to help you work around that. Especially if you are still working in the same field. This one stops a lot of people from moving forward because they may have moved jobs in the last two years but are financially ready to buy property. (Insert stress here.) I also know and love many service industry folks and independent contractors who struggle to get financing because their income doesn’t look “normal”.
Gather up at least two months of paystubs, invoices, etc. Any money generation source (legal of course) must be accounted for. You’ll need a copy of your driver's license and proof of residence. I think you’ll find that it may be a pain to gather all this stuff but it's not impossible and you are capable of doing hard things! I believe in you!!!
Credit Score
Good news in this area, you don’t have to have a great or even necessarily a good score to get approved. Credit and credit scores get people feeling a little jumpy if they know they aren’t in the best standing. Again, no judgement. We are all doing our best with what we have been taught and knowing is half the battle. So find out, even if it's scary. Knowing where you are can help you focus on getting to where you want to be. And who knows, you may already be there or closer than you think.
Once all these ducks are in a row and you’ve been given an approval amount (hopefully), you can begin the next stage.
What’s In A Home?
Depending on what your loan approval amount is, you might be ready to start looking. You may also find that what you were approved for and what is out there do not at all match what you are trying to accomplish. This just means you go back to the financial part and try to improve your debt-to-income ratio and save up more money.
What are your deal breakers? What about must-haves? Another area where stress will creep in and your expectations will get out of sorts. Let me just put it out there that there is no such thing as a perfect home. You won’t find it, I won’t find it. No one will ever build it. So just throw that idea right out the window, it won’t help you at all.
Instead, I invite you to approach this task with an open mind. Like you would a new relationship or job. There might be a lot of incredible qualities about your new Boo but trust and believe they will have some flaws to them and you will have to decide if you can accept it as part of the whole or if you're just not that into them. Same with home buying. Try not to get hung up on making sure every one of your boxes are checked because you might end up wasting a lot of time and miss out on a perfectly capable home.
If you’re low on dough and a novice handy person, scoot towards the move-in ready places. Trust me on this one. Once you start looking at properties and your brainstorming juices are flowing, things get exciting. Unless you are in a time crunch situation, it's better to take things slow. I did not follow this advice but it would be wise of you to. What you imagine to be realistic in a particular property during a walkthrough really needs to be thought through because mishap and money drainers are lurking around every corner.
Final Sentiments
Let’s say you found something you really like, first impression like that is. I have a few more snacks for you to chew on before you jump to make an offer. And I only say this because I have heard the horror stories, I have narrowly avoided my own, and I want you to be better.
This is a great time to have a trusted realtor working for you as well as a mortgage person. Key people that can truly help you determine if this is a *smart* purchase for you. Can you really afford it, I mean really really. Will you need a roomie or a luvah to help pay the mortgage? Is it going to overwhelm you to clean and keep things maintained? These are very real questions that you need to have figured out. What’s your backup plan if things with your finances change? As glamorous as home buying is and as capable as I believe you are in doing it, you have to know these things ahead of time.
*MoveToLou Life Advice*
If you are dating someone and either buying the house together or solo, know your rights. Talk to a lawyer to find out all of your options when purchasing, it WILL become important later on down the road.
I wanted to share this information with you because I value home ownership and I want you to be successful in all the years that you own. If you have any tips of your own please let me know in the comments below. I’d love to hear from you!