Home is more than four walls and roof. Home is a door opening to you, your family, your pets, your lifestyle, your neighborhood, your community, your city. It’s all encompassing on so many levels.
Street Cred - What's the Plan Stan?
Credit is not always as scary as it seems. Here a few simple steps to improve and understand the importance of it when buying a home.
Credit. I used to fear this word. For me, I used to hear this word and associated it with word like “debt”, “collections”, and “whomp whomp”. Some people have a more positive reaction to credit — discount, trust, Free Man! When I hear my potential clients say, “I have bad credit,” I follow that up with, “Do you know what your credit score is?” to which they reply, “It’s probably pretty bad.”
The point is, most people might think they have bad credit, I for one thought I did for a while, until I bit the bullet and started talking to lenders for my plan to purchase a home. Turns out I actually had decent credit. I think people just get scared when credit scores start to get pulled. I cannot tell you how many collection agencies I had to duck and hide from while in college and early adulting. I say with anything and everything you desire in life, go get it. Make it happen!
Some of you may not even know what a bad or a good credit score looks like or what is looked at when we are talking about the loaning of money. So here are few things you should know when you get started:
Before talking to a lender, pull your own credit score. It’s easy and it will show you what is amiss. You can do it at: https://www.annualcreditreport.com/index.action for free. Know that there is a culmination of three credit reports coming from Experian, TransUnion, and Equifax.
What’s the magic number? You want a credit score of 620 or higher to apply for a loan.
What do I do if I want to improve my score? Pay off debt, even if it’s just a little bit at a time, the activity will improve your score, especially those in delinquent status. Those are first priority.
Do not open new lines of credit or close existing lines of credit, this can hurt your credit score.
Get a savings account. If you are really serious about buying a house, start saving, it’s a good plan of action and will help you with your financial security.
It is a good idea to have some sort of credit when applying for a loan. Get a credit card with a spending limit and use it for gas or groceries and pay it off on time, this will build your credit history.
Pay your bills on time and try and pay more than the minimum payment due on any credit cards.
You are ultimately trying to change your debt-to-income ratio. Decrease your debt, improve your score, have a stockpile for your future down payment. It might take six months or up to a year, depending on your debt, but strive and make a plan so you can enjoy the benefits of home ownership. Good luck and start saving!
If you are ready to take that step, talk to a few lenders that can guide you and help you with your plan. They can answer all your financial questions and help you understand the loan process. Don’t get discouraged and don’t fear the information presented to you. Then you call me and the fun will really begin!
Home Buying: 5 Thought Distortions
You ever want something and just keep talking yourself out of it? I hear time and time again how people think they can’t attain homeownership…
I just bought my first home. I’m not only a real estate agent, but an almost 50 year old first time homebuyer. One of the things I keep hearing and seeing people post about is their inability to believe they too can buy a house. Some of you out there—CAN!
Thought distortions are habitual ways of thinking that are often inaccurate and negatively biased. I hear a lot of them on a daily basis, usually from myself (trust me I’m working on this). When it comes to home ownership this is what I hear:
It’s Cheaper to Rent than Own.
Um. No way. I’ve rented the house I just bought for four almost five years. I have given my landlord approximately $65,000+. Unless you live somewhere like California, chances are your rent is going to a lot less than paying someone else’s mortgage. Besides, you can’t raise the rent on yourself when you have a fixed mortgage payment and aren’t you just itching to be able to paint your own walls and not live underneath someone?
Don’t I have to put like, 20% down??
This is no longer necessary First time home buying doesn’t require 20% these days and in some cases you can put as little as 0% down! You also have more options and incentives as a home buyer. For instance, did you know that you could qualify for grants and assistance from state and local agencies? I've had a few transactions where money was given to assist with down payment for as little as taking an online class.
Ugh, I don’t think it’s a good idea to start looking in the Winter.
WRONG. It’s one of the best times to start looking because guess what? Those insane bidding wars that happen over the Spring and Summer where little Johnny’s parents are trying to find a house before he starts school…well you don’t have to deal with that. You get more time to really look at things and not have the pressure of other buyers to make a high offer. Your negotiating power is also increased. I love showing houses in the Winter. It’s quiet and you get to see how cozy homes can be! Also, the right time to buy a house is when it’s right for you!
I’m going with this lender because they have the lowest interest rate.
NO NO. Just because a lender has a lower rate doesn’t mean they will be the best one for you. Finding a lender who is going to be transparent and trustworthy should be a priority. If your are initially pre-qualifying that rate isn’t etched in stone. It’s easy to ignore other things like lender origination fees, points, mortgage insurance premiums and third-party fees. Finding a lender that fits you and your long term needs is essential.
My credit is crap, I’ll never be able to buy a house .
Whomp whomp buttercup, lift your head up because that is just not true. Also, don’t go into house buying with that attitude or you’ll never own. Just because you have debt or you think your credit score isn’t up to snuff, doesn’t mean you’re dead in the water. With home buying you need a PLAN and your lender is going to help you get to where you need to be. Kinda like that Noom coach. When I hear people give this excuse for not buying, I think of my gymnastics coach, “We don’t say CAN’T here.”
It’s easy to talk yourself out of things. I talk myself out of not buying a pair of shoes quite often. The key to all goals is to have a PLAN. Just the way one might approach weight loss for instance. You aren’t going to start with doing three sets of 100lb bench presses. You are going to set a goal and gradually accomplish the steps taken to get to that goal. You want a house, then make it happen. Here are some tips to get started.
Start with talking to a reputable lender, sometimes an agent can help with recommending one for you. The lender will guide you through the financials and tell you what your loan options are or what you need to get you more buying power.
Hire a good agent. Someone who listens well, who explains the process well, is knowledgeable, and who you fit with. Sometimes it ain’t gonna be your Realtor friend, Mark. Just make sure they work hard for you and understand your needs as a buyer. And most importantly, remember you don’t pay them, the seller does.
Don’t get discouraged. Nothing worth anything is easy in life, sometimes it takes a little bit of work, but the reward is worth it. We all know that. You have to be willing to stick to it and with the right agent by your side, your biggest cheerleader and your best advocate.
Know your limits. It’s exciting looking for homes, but sometimes you aren’t going to qualify for the home that has everything you want, and you need to accept that. Look for homes that are going to give you value and that you can live comfortably in. Your first home doesn’t have to be your forever home, remember that. Have some vision, think of what that home is going to be for you. We’re talking goals here people. Think of the trajectory.
So, what’s your thought distortion? Are you going to keep telling yourself no, or are you going to set out with a plan and make 2022 your year of home ownership? Need some help? I know someone who might be able to get you started 😉.