So let me guess, you're a millennial who loves taking selfies, online shopping, and traveling in groups. You've spent countless nights in AirBNBs across the globe and have been to more music festivals than doctor appointments. I mean, who doesn't love jet-setting, checking out the newest snap filters, and doing it for the 'gram? But even after all the memories, shared photo streams, and new friends from different cultures, there comes a time when even YOU must step into the dark (read: become an adult).
Let's face it "adulting" isn't fun, and nobody told us it would be. It's up to us to make it fun and to make it look good, just like everything else. In the spirit of giving this a start, I'm here to break down one of the most daunting "adulting" experiences of them all: HOMEBUYING
I'll keep this clear and concise just as if I was sending that Friday afternoon email to a client before signing off for the weekend. As a plus, I even decided to include a bonus soundtrack, to help you learn while listening to the finest tunes. Now, let's get into it.
1. Do your homework (Work - Rihanna feat Drake)
a.Take some time to understand the average home price in the area you plan on buying.
b. Scout the area to understand where new developments are coming up.
c. Find out which areas have the higher price ranges versus lower price range.
d. Websites like Zillow or Trulia are helpful (if you are in NC try my website here).
2. Understand the in's and out's of a mortgage payment (All about the Benjamins - Puff Daddy and the Family)
a. A common misconception: " I pay $1,200 in rent, so I can afford a $1,200 mortgage"... FALSE.
b. Do not treat a mortgage payment like rent, they are very different!
c. A mortgage payment will include PITI - Principal, Interest, Taxes, and Homeowner's Insurance. In some cases, it may also include HOA (Homeowners Association) fees.
d. Learn more about a mortgage payment here. Also, check out this mortgage calculator to estimate a possible mortgage payment.
3. Start saving for a down payment (Save Dat Money - Lil Dicky)
a. A common misconception: " I need to have at least 20% for a down payment"... FALSE.
b. FHA loans only require 3.5% - this loan product is very popular for first time home buyers.
c. VA loans, which are specifically for veterans provide 100% financing (NO MONEY DOWN).
d. USDA loans can also be 100% financing.
e. Learn more about different loan products here. There are also down payment assistance programs in every state, start to learn more about your state here.
4. Understand credit and monitor your credit score (Mo Money, Mo Problems - Notorious B.I.G., Ma$e, Puff Daddy)
a. Your credit score plays a major role in being able to secure a home loan, it's definitely a MAJOR KEY.
b. Take a crash course in credit. It's important to understand how credit works. Just because you pay off your credit card every month, does not mean you have tip top credit.
c. Learn more about how credit works and how to keep your credit score in optimum shape here.
5. Pick a reputable and trustworthy Realtor (21 Questions - 50 Cent)
a. Pick a realtor who is an area expert and has your best interest in mind.
b. Ask the realtor all kind of questions! No question is a dumb question. They are paid to be experts, so pick their brains.
c. Ask about down-payment assistance, interest rates, market updates, closing costs, and more
6. Get your paperwork together (Ps & Qs - Lil Uzi Vert)
a. In order to get pre-approved for a loan, a lender is going to ask you for several documents to verify your income, employment, etc.
b. Common documents include: Pay stubs, W-2s, tax returns, bank account statements, statements from outstanding loans and/or credit cards.
c. Do yourself a favor and get ahead of curve here. This will allow you to be as prepared as possible when working with a lender.
7. Find a few lenders and get pre-approved (What the Price - Migos)
a. A pre-approval from a lender tells you how much house you can afford. In other words, the pre-approval will tell you what price range you can comfortably afford.
b. Get pre-approved before you start your home search. Not doing so is essentially the equivalent of HGTV window shopping.
c. There are pre-approvals and there are pre-qualifications. I strongly recommend getting a pre-approval from your lender rather than a pre-qualification. If a lender will only give you a pre-qualification, you should insist otherwise, or find a new lender.
d. Learn more about the difference between a pre-approval and a pre-qualification here
8. Start your home search (Let's Get It/Sky's The Limit - Young Jeezy)
a. This is the fun part! Now that you are well informed, have found a realtor, and know how much you can afford, it's time to start your search.
b. Get in the car with your realtor, and go find your dream home.
Now that wasn't that bad, was it? Growing up isn't fun, but we all have to do it. Let's help each other prepare for life on the other side. If this was helpful for you, comment below, and most importantly SHARE with a friend.
Okay, that's enough adulting for one day. I'm off to Netflix n chill.