How to Start Your Home Buying Journey

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Congratulations!

You’ve made the first step in your home buying journey simply by asking questions. This is where the research starts. Whether it’s about your current financial situation, your retirement goals, or asking yourself if you even want to own your home, knowing where you stand is critical to getting where you want to go.

My goal in this blog series is to share information, resources, and actionable steps from a trusted friend who happens to be a real estate professional. (Learn more about me here.)

Staying ready empowers you to move if and when the market shifts. Whether it’s to create a home for your growing family or to explore the passive income opportunities in real estate, let’s start by asking questions.

Why Should I Own My Home?

The Harvard Joint Center for Housing Studies reports specific benefits for homeowners and their families including

  • Kids of homeowners are more likely to graduate high school
  • Kids of homeowners generally have less significant health issues
  • Kids of homeowners are more likely to own their own home
  • Homeownership is a significant source of household wealth
  • Particularly important for lower income and minority households
Maslow’s Hierarchy of Needs Image Source: https://nmtsreno.org/

Considering the principles of Maslow’s Hierarchy of Needs and also Housing First, it makes sense that people who have secured basic needs like stable housing are more able to pursue their highest self-actualization goals than those without housing stability.

Here are a couple other ways to think about it:

If you are living paycheck to paycheck and worry about rent increases, is there anything you can do to improve your financial situation?

If you do not need to pay $2000 monthly rent to your landlord, what would you do with the $24,000 equity built each year?

There is no reason to undermine your future based on what you may think of your current situation.

What do I need to know?

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First, you need an honest evaluation of your financial habits and your commitment to becoming a homeowner. There are costs (like property taxes) as well as lifestyle changes (like home maintenance) that come with being a homeowner.

Use this “Am I Ready” worksheet to start your reflection. Make sure to include your loved ones who will be taking this journey with you.

Next, it’s important to know your current financial situation starting with your actual budget and income.

Use this Budget Worksheet and Monthly Income Worksheet to gain an understanding of where your money goes & how it grows.

It’s not how much money you make but how much money you keep, how hard it works for you, and how many generations you keep it for.

Robert Kiyosaki, Author of Rich Dad, Poor Dad

After you take time to consider your lifestyle, finances, and goals, you can also educate yourself on homeownership through Freddie Mac’s CreditSmart Homebuyer U.

It’s a free online course you can complete at your own pace & offers resources and worksheets to cater to your needs. You receive a certification upon completion, which you can use to qualify for some first time homebuyer programs (for either low or high income) later in the process.

Who can help me?

After some self-reflection, running numbers, and initial research, you’re ready to start building your team of licensed professionals!

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Real Estate Advisor

Your real estate advisor’s job is to guide and educate you in this brave new world. Real estate agents make sure that you avoid expensive mistakes, and that your goals are met by working with you to create a strategic plan and a competitive offer.

Your real estate advisor can connect you to industry professionals like housing counselors, lenders, and contractors and vendors who are experienced and highly recommended. This saves time and stress because you can trust the quality of service and work. This is also why an agent is a great place to start even in the early stages.

There’s a joke among real estate advisors that once you buy your home, it feels like breaking up – although great agents stay in touch after you move in. Make sure to pick one you trust and like spending time with!

Housing Counselor

Housing Counselors help you get mortgage-ready. If your credit, employment, or other history is not yet strong enough to get a mortgage, a housing counselor can help you do a thorough review of your credit report and budget.

They provide tools to help you buy and keep your home by assessing your financial capacity and creating a plan. They can also help clarify how you could be impacted by interest rates and also more specific situations, for instance with any government benefits you may be receiving.

Lender

Lenders can get you pre-approved for your home shopping stage but they also support you throughout the homebuying process.

Who you choose as your lender, or mortgage provider, is important. Their role is to analyze a buyer’s overall financial capability to take on a mortgage. In other words, they are creating your story that will enable you to buy a home.

Highly recommended lenders are available to support you (and vouch for you) in the offer and escrow stages. In a multiple offer situation, a lender’s support is invaluable.

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When do I want to buy & Where do I want to live?

If you’re looking to buy as soon as possible, you are ready to shop when you have a pre-approval in hand & an agent to guide the way.

Considering the current market in November 2021 with low inventory of available homes, low interest rates, and high demand, you want to start shopping for your home at least three months before your desired move-in date & even earlier if you or your family have specific needs.

Why? Low inventory of homes means you may need to look longer for a home that fits your needs. High demand means there are a lot of players and multiple offers, which also prolong the offer process.

After your offer is accepted, it generally takes takes 30 days to close on the home and get the keys.

You may already be thinking about what your dream home looks like and where it will be located. Awesome – having a visual is going to help you in your house hunt as well as research on regional factors (like special taxes or environmental considerations).

But know that the first home you own may not be your dream home.

Buying and owning a home is a strategy to build equity, improve investment potential, and create generational wealth.

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Remember this & you can find the best starter home for your wants and needs in your current or near future situation. Sell & buy after a few years of appreciation with the equity you built up through mortgage payments (that did not go to rent). Rinse and repeat, of course, with trusted and licensed advisors who know your goals.

This is a journey for the financial empowerment of you and your family, if you want it.

How am I going to get there?

With careful and honest reflection on your current financial situation & a clear definition of what you want for your future, anyone can start today to boost their homeownership potential for the future.

Partnering with your team of advisors, knowing what to expect, and understanding how you can make money from real estate will allow you to make the best decisions to reach your goals.

Because the process of homeownership can be vast and complex, this post addresses some basics of starting the home buying journey. What would you like to see in future posts? Leave me a comment!

About the Author

Vivian Moon is a real estate advisor based in Orange County, CA specializing in first-time home buyers. As part of eXp Realty of California, one of the biggest and fastest-growing independent brokerages in the US, Vivian is excited to harness the power of real estate to help clients, including those from underserved communities, to reach financial empowerment.

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