So in my last blog I mentioned that I received $47K in down payment assistance towards my home purchase. While I attribute all glory to God for the miracle that is my home, James 2:26 states that faith without works is dead. So instead of just waiting for a house to fall in my lap here are the top five things I did to put actions behind my faith. Please note my tips also discuss the homeownership process using Down Payment Assistance which will also be referred to as DPA below.
1. Create a list and identify your top 5 non-negotiables: You may need a list for items 2-5 below but start off by determining what it is you actually want in a home. Maybe you have children and need extra room. Maybe you don’t want a long commute or Maybe you don’t mind a commute as long as you have a lot of land. What type of style house do you want? How many rooms/floors? Whatever it is you want, write it down. This can help you to start determining what your needs are versus your wants.
Once you have determined your needs and wants, look at them and narrow down your top 5 must haves for your new home. These are the things that no matter what houses you look at these 5 boxes must be checked, it is a non-negotiable. It will save you time and energy and help your realtor to understand what you are looking for.
2. Do your Research:
Neighborhoods: As a Jamaican American and parent, being in a diverse neighborhood and school district was extremely important to me. Coming from an affluent Caribbean community in NY, I researched neighborhoods with similar ethinic diversity using websites like Niche and Great Schools.
Lenders: If you are planning to apply for some type of DPA you want to make sure that your lender is actually certified to do so. You also want to make sure that your lender knows and remembers the process for doing so and is willing to walk you through it. The process can be long and tedious and you want to make sure that the lines of communication are always open.
Realtors: Again, if you are planning to do any type of DPA you want to ensure your realtor is versed in the different types and the home qualifications. Some DPA’s require your house to be no older than 5 years or have a certain type of sewage system or to not cost more than $230K, and the list goes on. Your realtor should know these things as it will narrow down your home search. You also want a realtor that is a great listener but can also provide their expertise in a way that you can easily welcome.
3. Get your finances in order and determine your budget. : We all go through ups and downs in life and I am no different. After I finished grad school, in December 2012, it took me 6 months to find full time employment and my credit suffered tremendously during that time. I felt like I was constantly taking from Peter to pay Paul, as my mother would say, and it took me years to repair the damage to my debt. When I finally got full time employment I made it a priority to consistently pay on time and above the minimum for all of my debt. While I am not where I want to be, my credit is way over the 640 credit score that most HUD/DPA organizations require for lending.
Now if we go back to our list from step 1, we will probably see that the things we want outweigh and cost more than the things we need. This is why knowing your monthly budget is important. Look at what you currently pay in rent and utilities and determine what you will be able to pay. Also know that your number of bills and the amount you pay will automatically increase if you transition from renting to owning a house.
4. Sign up for homeownership/financial education courses: As a former accountant I thought I had a pretty good handle on what it takes to get and own a home. I budgeted my funds, I had a nice little nest egg and I paid my bills on time. While this is great and definitely needed, unless you work in the homeownership industry you literally have just scratched the surface of what you need to know. I thought it would be a good idea to research HUD homeownership agencies mainly because I believed (not knew) that as a teacher there had to have been something out there to help me pay for a house. I was pleasantly surprised as I learned more about the qualifications for homeownership and my eligibility for DPA via the DreamKey Partners organization. I attended a four session course and met with a financial advisor regarding my credit and budget. They were also able to provide me with a list of lenders who are qualified to apply for the DPA I needed. There is so much more about this process and I will go into more details in a later blog.
5. Visit your prospective neighborhood/tour your home: With the current market a lot of times you will be tempted or prompted to place an offer on home sight unseen. I am not an expert so I will not give you advice on whether that is a good idea or not. This is why having a good realtor that you trust is extremely important. Whether you find yourself in this situation or not, make sure that you visit the home/neighborhood if you can. Try to visit at least twice and at different times, usually a weekday morning and a Friday/Saturday evening. This will help you to get a feel of the safety in the neighborhood and what your neighbors might be like.
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