For a lot of parents, buying a house is a dream come true. It’s not only a goal that has been reached, but it allows us to provide a better childhood for our children. We can establish a well-rooted home where kids can grow up in and visit during adulthood. They would be able to come back and reminisce on memories of their childhood.
It is exciting and beautiful to watch your kids playing in the backyard, enjoying the sprinklers, and marking their height growth on a column in their bedroom.
Moreover, homeownership also has a financial benefit. It is an investment that you can cash out on later in life and/or be a valuable property your children can inherit.
Disclaimer: The information provided in this post is friendly advice based on my experience. If you are in need of more in-depth advice, reach out to a financial professional and/or mortgage professional. This post is not sponsored.
We bought our house as a family of 4 under 1 income of 5 figures!
I was a Stay-At-Home-Mom of 2 boys, and we only had one income coming in. Our family’s income was in the mid 5 figures range. We are an average family that just worked hard and saved as much as we could to make our dream come true.
We closed on our house a few months before the pandemic hit. I know that some things have changed post pandemic and the housing market has risen. However, I want to tell you not to be intimidated by the housing market, it has always been bad and will always be expensive. The cost will only continue to rise as time goes on. So, do not delay your dreams.
Buying a home is something that anyone can do. We are not special in that way. As long as you stay focused and are disciplined, you can do it too.
This is why I have some tips that can help you achieve your goal of homeownership.
10 Tips to reach Homeownership
1. Pay off your debts
Your mortgage creditor will take a look at your debt-to-income ratio. This means that they will look at how much debt you have, and if your income can comfortably cover your debts plus a whole new mortgage. Basically, they are sizing up how much of a risk you are to them if they accept your loan request.
You will get a much better interest rate and loan terms if you do not have any debts, or your debts are very low. It will also allow you more financial freedom in your budget.
2. Work on your credit score
Do not make the mistake of neglecting your credit score. Do your best to get it as high as you possibly can. One way to do this is by paying your credit cards in full every month. This greatly impacts your credit score in a positive way. Try to avoid only making minimum payments each month. The myth that says that this helps increase your credit score IS A LIE! If anything, it destroys it. So, pay your credit cards in full. Don’t spend more than what you are able to pay off at the end of the month.
Extra Tip: Keep your longest line of credit in good standing and open. Even if your card only has a $300 availability. If this is your longest line of credit, never close it. That card is helping your credit score.
3. Cut out any unnecessary expenses
Are you paying cable for only a handful of channels? Who is your internet provider? Could you join a family phone plan to save a few extra bucks?
Think about your regular expenses and decide if you could cut out a few of them. Or in the very least, scale them down a bit. It might be beneficial to see what other companies in your area are providing the services you need and see who has a better deal. You might have the chance to switch to another provider and save a good chunk of money.
You might also want to see if there is a family phone plan that you could join to save money on your bill. Or even call your phone company to ask if they have any offers that you could take advantage of. This is something I still do. When my internet offer expires, I always call my service provider to see if there are any current offers that I may qualify for. Trust me, it helps.
4. Stop eating out
If you have the habit of getting a daily coffee and breakfast, buying lunch, and always ordering take out for dinner or eating at a restaurant, you are spending roughly around $30-$40 daily (or more). And this is just for one person. If you add your partner and children into this equation, then your number would be much higher.
Eating out on a daily basis can get super expensive. You may spend a week’s worth of groceries in just 2 days.
I know that not eating out often may be hard for a lot of people, but the money you save will make a huge difference when you take a look at your bank account.
5. Cook at home
If you’re not eating out, it means you have to eat at home. Try to get in the habit of cooking at home, packing your lunch, and brewing your own coffee before you go to work. If you don’t know how to cook, learn how to make a couple of simple dishes. There are countless of free and easily accessible videos that teach you how to cook step by step.
Perhaps, you can make it a family thing or just a couple thing. You can learn how to cook different dishes together.
Moreover, cooking at home not only has financial benefits from making this change. This will also allow you to eat healthier and have more control over what you are putting in your body. So, it’s a win-win!
6. Think before you shop
Do you like to update your wardrobe often and buy new home décor? Do you love shoes?
Well, I am sorry to tell you, but you have to stop. If you have clothes, shoes, and blankets, you do not need to buy more. This is where most people get stumped and are not able to move on from. Because they can’t help themselves into buying more stuff.
Before you make a purchase, really think: Do I really need this?
Try your best not to impulse buy. Impulse buying keeps people stuck in a loop of consumerism, while at the same time, draining your wallet.
Have you ever gone to your favorite store to get “1 thing” or “just to browse” and come out with 10 items…or more? I know I have. It happens, lol.
However, here’s the key: Does this happen often? If this a regular occurrence, then you are just pouring money out of your pocket and delaying you from achieving your goal.
So, really think before you shop.
7. No alcohol
I can already see so many people exiting to the left with this one. Alcohol is so expensive! Do your best to minimize your alcohol consumption for a while in order to grow your bank account.
Now, if you really want to have a drink, get them at a liquor store. You can also learn how to make some cocktails and have them at home. Avoid drinking at a bar or at a restaurant. One beer will be the price of a whole six pack at the liquor store. It’s just not worth it when you are trying to save money.
8. Be smart with your tax return
Tax season IS the most wonderful time of the year. Especially when you have dependents, lol. A lot of people use their return to pay off debts, or, as most people do, to go shopping and live large.
The paying debts part, do. This is great. The living large part, DON’T! Sometimes people receive a substantial amount on tax returns and waste it buying things that could’ve waited or were simply unnecessary.
If you really need to get something for the family, set some money aside to resolve those needs. The rest of it, save it! Do not touch it unless it’s an emergency.
Extra tip: If you are married, when you set up your W-2 at work put your tax status as single (This is just for the W-2. Once you file for taxes you can file married and filling jointly). You will have a slightly smaller paycheck, but this has a benefit. Doing this will ensure that you never owe money to the IRS. Remember, it’s better that the IRS owes you money rather than the other way around. However, if doing this will not allow you to make ends meet, then skip doing this.
9. Learn about the process of buying a home and mortgages
Not all mortgages are created equal. Do your research so you can determine which mortgage works best for you. Take time to explore the pros and cons of each and what programs you may qualify for (especially if you are a first-time home buyer). Learn the difference between being pre-qualified and pre-approved. You also need to know about Private Mortgage Insurance (PMI) in case you need one. You also need to know what your estimated Mortgage Interest Rate percentage is going to be since the beginning.
Note: Sometimes your mortgage lender will tell you what your PMI is going to be once you find a house. DO NOT wait that long to find that out. Ask early on about your estimated PMI. That way you can have a clear picture of what your mortgage is going to cost you.
Moreover, familiarize yourself with the process of home buying. There are different steps that you need to follow and expenses that you will need to cover outside of your mortgage loan. You will need an attorney, an Inspector (you need an inspection before buying a home), closing costs, etc. All these services will need to be paid out of pocket.
The more informed you are, the better prepared you will be when the time comes to start house hunting.
10. Use a mortgage calculator
I cannot emphasize this enough. Use a mortgage calculator!!! Do not only rely on your lender to give the sum of what you will be expected to pay. Remember how I told you to ask about your PMI early on? This is when it comes in super handy.
As you are house searching, input your numbers to figure out how much your monthly mortgage payment is going to be.
Information you will need for the mortgage calculator:
- House value
- Your mortgage interest rate
- Your PMI (if you have one)
- House property taxes
- Your down payment amount
- Your loan type (Conventional, FHA, etc.)
- Loan term (15 years, 30 years)
- HOA fees (if you’re looking into an HOA property)
- Home insurance (Depending on where you live, home insurance can be around $700 yearly. Do a quick google search and get the average for your area. It will land you around the ballpark.)
Do this for every house you are interested in. It’s only going to take you a few minutes. But it will allow you to have a clear picture of how much the house is going to cost you and how it can fit into your budget. Just because 2 houses are valued the same, it doesn’t mean it will cost the same at the end. This is mainly because of the property tax. Property taxes can greatly impact how much your monthly payment is going to be, so pay attention to that.
I always used the Mortgage Calculator. I like it because it allowed me to input all of the mortgage expenses and get a clear picture of how much our monthly expense was going to be. It is very accurate.
Note: You can start learning your way around a mortgage calculator now, even if you are not ready to buy a house yet. Input high and low percentage rates and the information of houses that you would like to buy. This will create a clear picture of how much house you can afford, but also what is the highest interest rate that you can manage.
Think about this
I know that this is a sacrifice. A difficult one. You may feel so strapped and like you can’t do anything. In our case, we had to save for many years in order to make our dreams a reality. But the road to success is not an easy one. If you really want to achieve your goals, in any aspect of life, you know that you will have to sacrifice a lot of things to make your dreams a reality.
Homeownership is not any different. You may have to make some sacrifices up front, but you will be able to reap the results of your hard work.
Now, this doesn’t mean that you can never treat yourself. You can. It just means that you have to be more conscious with the way that you spend money. Instead of eating out 3-4 times a week, compromise on doing so one time a week. If you are the friend that is always treating, then maybe take a step back and allow the people around you to treat you.
Remember this, the road to achieving your goals may be hard. But once you get there, it all would have been worth it.
Psss… Having a home and creating a safe environment for our children to thrive in, is the goal of every parent. However, there are some gifts that we must make sure they receive along the way. You might be interested in reading 8 Gifts We Can Give Our Children So They Can Grow into Good Adults.
