Roses are Red, Violets are Blue, I Would Love to Own a Home, But I Don’t Know What to Do!
If homeownership feels like a distant dream, don’t worry—you’re not alone! The good news? It’s absolutely attainable, whether you're aiming to buy in 6 months, a year, or even longer. Here are five things you can start doing today to put yourself on the right path:
1. Tackle Your Debt
Your debt-to-income (DTI) ratio plays a huge role in qualifying for a mortgage and securing a lower interest rate. Ideally, your total debt should be less than 35% of your income. The lower your DTI, the less risk a lender sees, which can result in a better interest rate for you.
Start by paying down your debt strategically while keeping your lines of credit open—this helps maintain a strong credit score, which is another crucial factor in mortgage approval.
2. Build Your Savings
Make it a habit to set aside at least 10% of every paycheck into a savings account dedicated to your future home. Consider opening a high-yield savings account at a different bank than your regular checking account—out of sight, out of mind! This will help you accumulate funds for your down payment and other upfront costs without the temptation to dip into it.
3. Plan Your Career Path
Lenders love stability. If you're employed, ensure you have a steady job history—most lenders require at least 6 months to a year in the same position before considering that income for a mortgage.
Are you self-employed? Make sure you're paying yourself a regular salary and keeping your financial records in order. A tax advisor can help structure your income in a way that supports your homeownership goals.
Also, check out special programs for certain professions—civil servants, police officers, firefighters, and teachers may qualify for down payment assistance or low-interest loans through local credit unions and government programs.
4. Understand the True Costs of Homeownership
Owning a home is more than just a mortgage payment. Be prepared for additional costs such as:
- Property taxes
- Homeowners association (HOA) fees
- Supplemental tax assessments
- Home maintenance and repairs
To offset some costs, you could consider house hacking—renting out a portion of your home for extra income.
5. Connect with the Right Professionals
Navigating the home-buying process is much easier with the right team on your side. Here’s who you should have in your corner:
- A tax advisor to help you prepare financial documents, especially if you’re self-employed.
- A mortgage lender to assess your credit, explore loan options, and determine how much home you can afford.
- A real estate agent (like me!) to find the right property and connect you with other trusted professionals.
I have a network of vetted experts who can help you at every step of your journey. If homeownership is your goal, let’s get you on the right track today!
Looking forward to helping you make your dream home a reality!