Looking to buy a home, but not sure where to get started?
In today's video, I am sharing 5 beginner tips on purchasing a home.
I know I've been sharing a lot of things about
selling a home because that's what I just did.
But today's video is all about purchasing a home.
I am Tiffany Thomas with wealthytiffany.com and I achieved
financial freedom at age 38, mainly through real estate investing.
And if you are looking to achieve financial freedom at a young age as well,
hit that like button and hit the subscribe button and we're going to dive right in.
Alright, tip number one is to figure out exactly how much you
want to afford. And this is probably different than what you can afford.
A lot of people look at their numbers and think,
okay. I can afford this mortgage payment.
But do you really want to afford that high of a mortgage payment?
You want to take a look at all of your numbers
and all of the costs associated with purchasing a
home, and maintaining a home, and make sure that you want to afford that amount.
For example, if you were purchasing a home with an HOA, with
a homeowner's association, you'll want to take that monthly fee into account.
And if you're looking at purchasing a single-family home, there could be a lot
of yard work, or yard maintenance in order to take care of that home.
I know for me, the single family home that I purchased, the yard
maintenance has taken quite a bit of time
and money because it is a pretty large yard
and the sprinklers have to run quite often to keep the grass green,
especially in Utah, where it is drier.
So, I have spent a lot of money on the water bill.
I don't include that in the utilities that the tenants pay.
There's also extra fees for the garbage, and for the street lights, or the
storm drain, also the sewer. So there's just a lot of extra costs that are involved.
You want to make sure that you are leaving enough buffer to pay for
those extra things. And a lot of people will recommend spending a thirty percent of
your gross income on your mortgage payment,
but I don't like to recommend a certain number.
You may not feel comfortable going as high as 30% that might make you feel
strapped for cash. So you really want to take a look at your budget, at
your own numbers and what all of your expenses are, and then decide.
Okay, will I feel comfortable spending this amount on my mortgage payment plus all
of the extra fees that are associated with owning a house?
Once you figure out that number, you can go to an online calculator
and punch in the house price and the interest rate, and determine how
much a mortgage payment would be on a certain house price is.
So that you can get an idea on how much you
I'd actually want to purchase the home for. Now that
you know what your number is, what you actually want to afford.
If you are looking at homes that are over your budget,
you are going to want one of those homes and you will not be happy if you
purchase that and then you are always feeling strapped for cash.
And since housing is one of the largest expenses that people spend
their money on, If you can keep that cost as low as possible,
You'll be able to save money or even invest more money along the way.
And that way you can become financially free even sooner. And moving to a tip
number two. This is figuring out the area that you want to live in.
You can always purchase a home and make upgrades or do remodels,
but you can't physically move your house to a different location.
So you'll want to make sure that you are choosing a location
that is going to be good for you. So you can take into consideration
if you have kids and you need good schools in the area,
or maybe you like to be really close to a shopping center,
or a park, or even the Canyons.
Or maybe you want to be completely away from everything
and have a lot of space with a huge yard and neighbors not right next to you.
It's your preference. So you decide the area that you want to be living in.
Once you've chosen the area that you want to live in, tip
number three is to figure out your non-negotiables.
What is it that you really need in a home?
For me, personally, when I was purchasing my third property,
I wanted a basement. That was a non-negotiable.
There were a lot of properties for sale without basements,
but I wasn't even looking at those because I knew I wanted a basement,
whether it was finished or unfinished, didn't really make a difference.
But for me, living in Utah, when it is so hot in the summer.
I like going into the basement where it is a lot cooler.
So if the basement was unfinished, I could definitely add another
bedroom and that's what I ended up doing with the property that I am currently selling.
So decide for you, what are your non-negotiables?
Do you really need a walk-in closet? Or would you be okay with a regular closet?
Do you want a garage, or a really large yard,
or a small yard, or maybe you want a townhouse where you don't
have to do any yard maintenance. Figure out
what is really important to you?
What you are not willing to negotiate on.
And be realistic about this, especially where you already know your number,
you know how much you want to afford. And if your non-negotiables are a lot of
extravagant things, but your budget is not there, then that is not going to line up.
Comment below and tell me what is one of your non-negotiables.
Alright, this brings us to tip number four.
And this one is to figure out your credit score.
You want to make sure that you are purchasing a home which is a super large
purchase with the highest credit score possible.
Because the higher your credit score,
the lower the interest rate will be on the loan.
And if you are wondering how to raise your credit score quickly,
I do have a video for you. I will leave a link above and below in the description.
You can check that one out. It's important that you know
your credit score before going in to get approved for a mortgage.
This way, you can have an idea on if you really need to build up
your credit before you purchase a home
or if you take a look at your credit score and you think, all right,
I can just boost it a little bit and get a really good interest rate.
Then you can do a few things to boost that credit score
and then you can try to get approved
for a mortgage loan with a lower interest rate
and you can get your physical credit report from freecreditreport.com.
It won't affect your credit. That's an easy way
to figure out exactly what your credit score is.
I know I have talked about credit karma before which I still use
but it doesn't give you your exact score.
It gives you an estimate. But when you are making
such a large purchase you want to make sure that you have
as good of a credit score as possible.
So you want to know exactly what that credit score is.
If having a higher credit score gets you a quarter percent better of an interest rate.
That will save you so much money over that 30-year loan.
It will be worth it to have that higher credit score,
and this ties in with tip number five,
which is to get at least three loan estimates from different lenders.
When you are doing this, they will want to pull your credit.
But you don't want them to, because
each time your credit is pulled that will drop your credit score.
So by doing tip number four by figuring out,
what your credit score is exactly.
You can just tell those lenders. I want you to base your loan estimate off
this certain credit score. And the reason I recommend getting
at least three different loan estimates from different lenders is
because the rates vary from lender to lender as well as the closing costs.
So you want to have the lowest interest
rate as possible and the lowest amount of closing costs as possible.
So if you're just going into the credit union,
where you usually go, where you have your checking and savings,
they may not be able to give you the best terms of the loan.
Make sure and do your homework on this one because this is such a large purchase.
You will spend a ton of money over a 30-year period of having this mortgage
and the lower your interest rate
and the lower your closing costs are, then the less that you can pay
for this and you can put that extra money that you would be saving
somewhere else like into another investment, like going on a vacation,
or even just putting more into your investment accounts.
Those are the five beginner tips to purchasing a home.
I know there are a lot of other things to take into consideration.
So comment below and tell me what else I missed.
And if you are wanting to purchase a home,
but just haven't been able to save up enough for a down payment.
I would recommend tracking your money. And I like to use Personal Capital.
It is a free app that you can hook all of your financial accounts to like,
you're checking, your savings, your credit cards,
your 401(K). You can see your full financial picture in one place.
Very simply. So if you were interested in something like that
so that you can see how much you have
in your savings and where you are spending money.
So that you can spend less money and put more into savings toward a down payment.
I will leave my referral link below in the description
and you can click on that and get a free $20 Amazon gift card.
When you hook at least one of your retirement accounts to Personal Capital.
And if you found this video helpful, please hit that like button
and share it with someone else who is looking to purchase their first home.
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check out the videos on the side of the screen.
Thanks so much for watching. I'll see you in the next video.