There is tremendous satisfaction and accomplishment felt when owning a home at a young age. It becomes a reality when putting the effort into planning and following these four simple steps I will share with you here.
As I covered in the first post Buying A Home At 25 Years Old there are four categories in preparing to own a home.
Now let’s cover a couple of key points in each of these categories to address information you may have received or not and if you did, you may understand or not.
Credit Score
The question you may ask “if my credit is low can I use my utility bills to offset that”. No, if your credit is low the actions that have caused it has to be addressed one at a time to elevate where you currently are. If you have no credit, on the other hand, you may be able to use utility bills that show you in good standing for the past twelve months.
Co-Signer
What if my income isn’t high enough I can get a co-signer that makes more to help me out. You can get a co-signer to help and whoever that person is they must have their financials checked to see if they meet the parameters necessary to carry the additional debt of the home on their record. Additionally, their credit will need to meet the parameters required by the lender. This generally needs to be a family member, a spouse, or a partner.
Employment Length
I’ve heard I need to be at the same employer for the past two years. That used to be a requirement but with the economic changes and job needs by employers changing so much, so rapidly and so often this is not a requirement. What is required is to be prepared with a letter of explanation of why you left one job for another. Showing you left because of an offer that would increase your income and your opportunity for it to increase at a more rapid pace is always good.
How Much Saving?
Will $500.00 enough to have saved? It’s really hard with the expenses I have right now.
A good minimum number to start with is $2,000. There are several ways to get to the number. A couple of ideas would be:
1-Sell something or somethings.
2-Move home and save what you were paying for rent don’t spend it on other things.
3- Get a part-time job temporarily. Once you do, take all of those earnings and deposit for savings don’t spend any of it on other things.
4- I highly recommend the book, You Need a Budget, which is available on Amazon for about $16.00 and it will help you have a whole new mindset around money for the rest of your life.
These four points are part of what I refer to as the not-fun part but essential to the foundation of your finances on a go-forward basis. When you look at it metaphorically like building a house, it is the foundation. If the foundation is poured properly after the grading has been done properly and the rebar and supports have been installed and engineered to meet specifications to withstand the weight and impact the structure will need to bear, then the structure will stand for many years. Likewise, if you lay the financial foundation properly with credit, savings, employment, and income you will be able to weather the economic storms of life more efficiently.
Congratulations for having the desire and being willing to put the action into the steps necessary to be a homeowner. You will be on track for making your money work for you over your lifetime instead of helping someone else build their wealth by paying their mortgage payment with your monthly rent. The largest component of wealth in an estate is the real estate owned which gives the owner many more choices when life happens.