I can't believe I've been a homeowner for 3 whole years! And it's been 3 adventure filled years. I can remember as a teenager and young adult being obsessed with HGTV (actually, I still am) and LONGING to have my own home that I can decorate and design. You see, no one in my (immediate) family owned a home - we always rented. I didn't come from money nor did I have the knowledge of what it would take for me to fulfill my dream of becoming a homeowner. So as a young adult, buying a home always felt like a lofty goal. But I was determined to do whatever it took to get myself ready to be a homeowner, even if it meant that I would be the first in my family to purchase a home.
So how DO you prepare for your first home, especially when you're just coming up and not necessarily ballin'? Well, here are some practical tips that I can share from my experience that might help.
1. Put a financial strategy in place
I think a lot of people assume they'll never be able to afford a house because of finances, but you have to get ready. I approach everything in life, including home buying, with a strategy. Do you know how much you want to spend on a house? How much of a down payment should you save to be able to afford a house with that price tag? Do you make enough money to afford a mortgage and monthly expenses? For example, if you want to buy a house for $200K, then set a savings goal for what you would need to pay in closing costs, including your down payment, and work backwards. Lay out all the costs and decide on how much you should and can put aside monthly to help you pay for closing costs.
Sometimes you have to have tough conversations with yourself - I wasn't making a ton of money when I first got serious about buying a house and I knew I had to get a game plan in place. Maybe you could wait until you get promoted and make more money to be able to afford the monthly mortgage. Or consider a side hustle to help you earn more if you think it's not enough. You can also think of ways you can cut your monthly expenses (e.g. do your hair and nails at home for a while or skip the vacation). I made a LOT of sacrifices in order to save for my house, and I know you can too! Sometimes it might take a while before you feel financially ready, and that's ok too. Your savings goal and timeline is completely up to you, just be realistic about what you can afford because buying a house is a huge financial responsibility. But don't assume you can't afford it - lay out all the numbers and facts. Consult a financial advisor if you need help figuring out your financial plan.
2. Get rid of credit card debt
In addition to saving a nest egg for your first home, It's also a good idea to pay down any credit card debt first. The amount of revolving debt you have will impact your ability to get a good interest rate on your mortgage and impacts your credit score as well as your debt-to-income ratio. Plus, you don't want to stretch yourself thin on a monthly basis. It's always a good idea to buy a house with a mortgage that you can comfortably pay without having to worry about pesky credit card payments. You'll be surprised how much you spend on the monthly maintenance of a home that you may not have considered while renting (e.g. fixing something that breaks, cleaning your gutters, lawn maintenance to name a few). Free up your finances for all the homeowner things that will come up. Just make sure you don't re-accumulate any credit card debt after paying it off.
3. Buy what you can afford.
This is a big one. Can I be honest? Your first house will likely not be your forever home. Meaning, you don't have to buy a huge mansion with all the finishes like you see on HGTV right now if you can't afford it. There's a level of humility here. It's tempting to see all the new shiny homes and want it all - and if you can afford that, by all means go for it. But it's ok if all the fixings are not in your price range right now. Have a look at what kind of homes are out there in your price range and stick to your budget. For example, my kitchen was not updated when I bought my home. But over time I was able to install new granite countertops and buy new appliances. Your first home can become whatever you'd like it to be...with time. And maybe with your second home you can afford more features and fixings, which will be a huge accomplishment!
Buying what you can afford is also something to think about when considering what neighborhood you'd like to live in. A spacious home in the city might cost you more than in the suburbs. If your desire is to live in the city, consider a smaller home or maybe something not as updated. Alternatively, you can buy that spacious home in the suburbs, and then move back to the city when you can afford what you want in that location. It's all up to you, really. For me, it was important to live in a neighborhood that had potential for equity growth. If you're considering a house you can afford in a neighborhood you're not as familiar with, do your research to see if it's someplace you'd be happy living long term. You can also contact the city to see if they have any long term plans for development, which can equate to growth in your home's value, which is always a plus.
4. Prepare for life after closing.
We hear so much about down payment and closing costs, and I don't think we talk enough about being financially fit after closing. Make sure you have a contingency fund for your home for repairs or if you were to lose your job. What would you do if a tree falls on your roof or if your HVAC breaks down? Hopefully none of that happens, but make sure you're not broke after that closing cost payment gets deducted from your account. You'll be so much more at peace and prepared should the unexpected occur.
5. Don't compare your journey to others'
My home buying journey was unique from anyone else's and I make it a point to never compare myself to anyone else. If I see someone my age with a beautiful home, I cheer them on because what they choose to spend on a home vs what I choose is an individual choice. I bought my home in my 30's and that's ok. I chose to buy a smaller home, and that's ok. I bought my home as a single woman, and that's ok. There's no formula for what age or marital status you should have to buy a home. Also, don't feel pressured - what are you in a rush for? Buy when you're ready. Your journey is yours and yours alone - focus on that.
In closing, I am proud to be the first homeowner in my family. If you're embarking on a first time homeowner journey, I salute you! Focus on your plan and don't compare your journey to any one else's. Don't let the financial responsibility discourage you, but also don't let anyone rush you. Owing a home is a huge financial responsibility, but it can be done if approached with strategy, knowledge and financial readiness.
Until the next adventure,
*Disclaimer: the content of this blog post are from my own personal experiences as a homeowner. Please consult a financial advisor, loan officer and/or realtor to determine if you're financially ready or eligible to purchase a home.