In my last post, I discussed everything from the sense of security home ownership provides to legacy wealth and how to leverage equity to fund life events. You probably noticed that in that discussion some barriers surfaced. Some of these barriers are real, but others are fears that cause you to feel you are not ready to become a homeowner when, in fact, you are quite qualified.If you are on the fence about buying a home you are not alone. Let me help you answer the ever-popular question, "Am I really ready to buy a home?"
Several of my real estate clients ask me this question on a daily basis, and some of the common hesitations are; Who do I talk to? Should I start with a lender, a realtor or Zillow? Where does my credit score need to be? Do you know how much money I'll need to buy a home? Can I buy a home in this market? I hear it's a volatile market, but is it true? I don't have unlimited funds nor do I want to overpay for a home! Let me tell you, I know exactly how you feel! As I mentioned, I bought my first home in 2013 and while the market was less competitive, it was still murky waters without a good guide. My lack of the right guide led me into a deep dive of what buying a home entailed, and though I did some reading and investigation , I still ended up at the closing table with some unanswered questions, and all I could do was hope that everything would work out. Thankfully, my husband understood the loan aspect of the transaction, and things did work out for us. This experience taught me I that I do not need to have all the answers. What I do need are trustworthy, knowledgeable professionals to guide me through the process. That is what I am here to offer; I will provide you with actionable strategies to get you there without feeling lost or overwhelmed.
It is important to keep in mind that your concerns and questions are valid. For some of us, purchasing a home will be the biggest purchase of our lives. The first time you buy a home it will feel like a maze but I want to reassure you that your second or third home will be a walk in the park and I will be alongside you through the years to enjoy all the other experiences but first let’s get through this first one. The best way to experience and enjoy the home buying process is breaking it down into smaller steps. Mindset is going to be very important here, if you have to pay to live somewhere you deserve to pay yourself. Do not allow outdated myths, other’s opinions or fears about buying a home disrupt your determination.
First step is to sit down and study your finances. Examine them well, what debt do you have? What are your spending habits? How much do you earn and have you had a consistent source of income for the last two years? Do not confuse source of income with a job they are two different things you can have different jobs as long as you have documentation of it in the form of W2’s or 1099 forms. Know your credit score, you are entitled to a free annual credit report. The reason you want to do this first is that you may not be ready today but if done methodically you can turn your finances around in months of hard work. Millennials are the biggest buyers in our current market and they have another barrier that their parents may not have encountered and that is student debt. Don’t get stuck here many professionals with large amount of student debt become homeowners every day. This step is so important because you want to get debt to a manageable level and create better spending habits in order to afford a mortgage and all the other cost that come with owning your own home. This is my favorite step because you have absolute control over it and when you are determined nothing will stop you!
I have great tips about money management, easy budgets and the overall relationship with money because this is a fact, “You do not work for money!” The only role money has is to serve you, money is used to trade services and goods, it's only reason for being is to make your life comfortable and once you believe this you can have full control over it. "Money is our servant not our god. Let it serve you not the other way around." – Debasish Mridha
I will talk about this in more detail at a later date but reach out for more information if you just can’t wait! I know I can't! The last component to this phase is your savings account. ALWAYS pay yourself first as you are paying down debt or cutting back spending start to build a savings account.
Second you will need to decide where you want to live. Do you enjoy and cannot give up city living? Are you looking for more space or a bigger back yard? We are so fortunate to live in Northern Virginia an area that offers so many options. There is a place for all preferences and all budgets. Deciding where you want to live does not have to be very difficult. To make this a simple decision think in increments of five years. We do not live in the days where you bought a forever home the first time around. This usually happens on the second or third purchase in my opinion. This approach will make it more manageable for you to decide because who can predict what their family unit, lifestyle or income will look like in 10 or 20 years. You simply cannot plan for that and you truly shouldn’t. Make life simple and live in the moment buy what you need now or in the very near five-year future.
I know this from experience my first home was a beautiful three-story brick front townhome in Lake ridge Virginia. I was in love and thankfully it's still in the family so I can still love it from afar but 3 years after purchasing it my husband and I realized that we wanted more backyard space as we went from having zero children to two in under two years. Yes, you heard that right ... what can I say I like to go all in when I do things! The space inside the home was right but some outside elements were no longer serving their purpose and I am a big believer that I pay for a home and it needs to serve me fully. This is to say that you just don’t know what is coming your way no need to overcomplicate this decision.
Now let’s address the elephant in the room the market. It is an extremely competitive market. It’s a sellers’ market. There we said it. Now get past those statements and repeat after me. “The market is cyclical its always changing!” Do not be discouraged by that fact. When you are ready to buy and have all the tools to make it happen you don’t wait you just buy in the market that you are in. Besides we all know that in real estate the perfect time to buy a home was 10 years ago. What you do need to do is pick the right team to help you maneuver the market. A great lender that will find the right loan for you and fit it in your budget, a real estate agent that is a great communicator and can differentiate you from all the other buyers while keeping you calm and still letting this process be enjoyable and a great settlement company that will ensure to get you to the finish line.
In summary the following questions will help you decide how to proceed?
Do you have two years of consistent income?
Do you want to live in Virginia for the next couple of years?
Are you comfortable managing debt and what is your credit score?
Do you have a savings account with an emergency fund?
Do you have enough cash or liquid assets (401k or investments) for a down payment?
Do you know how much you can afford monthly on a house payment?
Are you willing to make some sacrifices to become a homeowner?
Are you ready for home ownership?
As a 23 year old, if you sat me down and asked me are you ready to become a homeowner I would not have known the answer right away but if you asked me the questions above they were all a YES! What is your response to these questions?
Now that you know you are ready to become a homeowner lets get strategic, let's figure out how much you can afford to buy. See you next time! Like always thank you for your time.
Always here to help,
If you need a good plan to get your finances in order reach out to me, we will sit and get a plan together. You can also follow me on Instagram @sohamymarquina I post weekly tips about real estate and finance that will help you get started.