New to the Live Richer Challenge: Homebuying Edition? Learn more about it HERE.
This Week’s Goal: To learn homebuying basics including the various methods of purchasing a home and, if you choose a mortgage, how lenders review your income to determine how much you can afford.
Day 1: Homebuying Goals
Today’s Easy Financial Task: Identity, write down, and share your homebuying goals.
How to rock this task:
- List your homebuying goals.
- Get acquainted with the format of this challenge.
Welcome to the first week of the LRC: Homebuying Edition!
This first week sets up the basics you need to know about buying a home. This is one of the biggest purchases many of us make in our lifetime, and navigating the process of making such a large purchase can make you a bit anxious.
Not to worry, though!
I’m here to break down the basics of buying a home in simple steps to help you prepare for your next purchase.
Whether you want to buy within the next few months or the next few years, the LRC: Homebuying Edition will offer some guidance to help you fulfill your dreams of becoming a homeowner.
Partnering with me throughout this challenge is Netiva “The Frugal Creditnista” Heard, who is a credit expert and realtor.
She even has a gift for you! Click the pic below to get your Challenge Freebies.
Before starting this challenge, we want to cover the very basics, starting with one important question...
Are you ready to buy a home?
Here are some ways to know if you’re ready to buy:
1) You plan on staying in one location for a while. Unless you’re buying an investment property, be reasonably sure you’re ready to lay down roots in a specific location before buying a home there.
2) There is no big-ticket item or experience you’d like first. Once you get a house, that dream trip, hot car, new business venture, etc., may have to wait. The money you once had in excess will probably be reduced during the first few years as a new homeowner. Is this a sacrifice you’re willing to make?
3) You’ve consulted your future MONTHLY budget. This is the budget you’ll be living on once you own a home. After doing said budget, ask yourself - after all of your expenses are taken care of…AND I MEAN ALL TAKEN CARE OF (old bills, utilities, new home expenses, entertainment, groceries, etc.), will you still have money left over to save? You should. Do the math. If your current income won’t cover your future expenses and leave you with money left over to save, you can’t afford to buy a home.
Need to get your budget together? Get a copy of my bestselling book, the One Week Budget, here.
4) You’re currently saving your new (home) expenses each month. If you really want to know if you’re financially ready to buy a home, begin paying your mortgage and new home expenses to yourself in a savings account now (minus your rent). If you can’t pay a mortgage now, then you won’t be able to “magically” pay your mortgage later.
5) You LOVE or at least like your job. If you own a home and hate your job, it will be very difficult to leave a steady paycheck (despite the soul-crushing stress), because of your financial obligations (mortgage). If you don’t love what you’re doing and are renting, you can always leave for something else that may pay less, because moving to a cheaper place is a solution. Although a hassle, moving is much easier when you’re renting.
6) You’re looking for a mortgage on a home that is rentable. That means if times get financially rough and you have to move to a cheaper apartment, parent’s house, or friend’s couch, could you rent your home and COMPLETELY cover your mortgage, taxes, and insurance? Figure this out by comparing the rent of similar homes in the area where you are considering buying. Structure your deal to make your mortgage the same or under what those homes rent for. This might involve putting down a large down payment, reducing how much you pay for a home or paying for discount points to reduce the interest rate. (We’ll cover how to save for a down payment and what discount points are later in this challenge.)
7) Make sure it’s something YOU really want. I bought a home because I thought it was what I was “supposed” to do as a responsible adult (25 at the time). Not so. There’s nothing wrong with renting. Renting is NOT throwing your money away, but allows more financial freedom. Renting for a while is what made it possible for me to start a business and travel the world. Buying for the RIGHT reasons is good too, though.
The First Two Tasks
Now that we’ve covered some things to think about before buying, let’s head right into the first few tasks of this challenge.
First, write down two goals that you have for the LRC: Homebuying Edition.
Here are a few good examples:
- By the end of this challenge, I want to learn strategies to save for my down payment.
- By the end of this challenge, I want to learn down payment programs I can qualify to buy a house.
- By the end of this challenge, I want to know what credit score I need to qualify for different home loan products.
Don’t miss this step!
Download the goal sheet HERE to write your goals down.
Setting tangible goals for this challenge is important because:
- Identifying and writing down goals gives you a mission to fulfill as you’re completing tasks.
- Writing down goals gives them power.
- Writing down goals holds you accountable.
Your final task for today is to pick an accountability partner(s).
Choose a friend or get with a group of people who are taking the challenge with you so you can keep each other on track. You can also head into the Dream Catcher Facebook Group to find other Dream Catchers who are working through the challenge. Join the Facebook Group HERE.
Start today by sharing what you're working on today with your tweeps!
Share your goals with me in the comments below, too!
You can reach out to me here:
Facebook: The Budgetnista
Private Forum: Dream Catchers : LIVE RICHER
Want the LIVE RICHER Challenge: Homebuying Edition in book form? You can find it here: LIVE RICHER Challenge: Homebuying Edition.
P.S. Have you saved, printed & posted the LRC: Homebuying Edition Calendar yet? It makes for an awesome checklist. Click on the picture, save & print it today.
P.P.S. Don’t forget to get your free Live Richer Challenge: Homebuying Edition Starter Kit. Download it HERE.