Three Ways To Purchase A Home, Even If You Think You Can't Afford It.
I'm going to give you three ideas on how to purchase a home, even if you think you can't afford it. These are things that I've learned from over 20 years in the mortgage industry, that I want to share with you today. You know, there are so many different ways that you can get into a home, and people really don't know some of these common ideas and concepts that loan officers know,, and have seen over the last 10-20 years.
What I wanted to share with you today is a couple of these tips and tricks that you can maybe utilize in your life to get your foot in the door of home ownership, one of them being, a cosigner. People have heard of the term cosigners, but typically on cars and leases of automobiles, but you can also get a cosigner for a home. Your parents, grandparents, maybe an uncle, or a brother or sister can sign on the loan with you. Now, they are going to be responsible for that payment, just like you, so if you do not make those payments, it'll affect their credit. However, if they've got good income, and your income's sort of okay, and you need that lift to qualify, having a cosigner be a part of your application is a great option. I see a lot of parents doing that for their children. These parents have had these kids living with them in their home, living rent-free, and they want to get them into a house. These kids have good jobs, but they just don't have quite enough for a down payment or the income that is necessary to qualify for a home, so what they'll do is they'll get their parents involved. Their parents will actually apply on the application and get qualified that way, getting them in the process of home ownership and getting that wealth creation in place. The idea there is that you don't have do to that forever. The parents can stay on the loan for two, three, four years, and as soon as you are ready, you can refinance them off. Or maybe the plan is that you'll flip the property in the next couple of years and you'll sell the home. You'll take them off, and maybe at that point you'll be ready to buy on your own. So cosigners are a great, great option. Another great option to consider is down payment assistance programs. People think that they need to have these big down payments and it's stopping them from really considering buying a house. There's many counties out there, and special programs, especially in California, that'll allow you to get funds available for down payments of homes and closing costs for homes. There's restrictions on all these different programs and they vary from county to county and depending on your credit score and profile, but something that you really want to look into. If you're really tight on your funds and your money, and you just are looking at the fact that you can't buy a house because you don't have the down payment, you need to start doing the due diligence to know what is it going to take for me to buy a home, how much down payments it's going to need, and what are the closing costs involved, and what kind of money will I need for that? You need to identify these things now, so that you can plan for the future and get into a position that you're ready. What I find is that a lot of people will come to me when they think they're ready to buy a house now, where if I would have talked to them six months ago or a year before, we could have gotten them into a home, they would have built equity because they bought sooner, but they didn't know the different programs and options available to them. So it's very important to talk to a loan officer and get those specific ideas on what is necessary, what you can find out there to get you into a home. So down payment assistance programs are a great option for that. To boot with the down payment assistance is that there's loans out there that'll allow you to put as little as 3% down, and if you're a veteran, you could put zero down, and so if you're a veteran out there, consider a VA loan. That is a great loan for veterans, and that'll allow them to buy a house with zero down payment. But for those that are not veterans, 3% down is not a lot of money. I mean, it's going to take some time, and it's going to take effort on your part, to create sacrifices and build that nest egg so that you can buy a house, but you want to be clear on what type of property you can get your hands on in your local market and what down payments will be necessary. Again, that's a conversation with a loan officer and it's identifying what you can afford based on your income on the house that you want to buy. So don't think that you need 20% down or even 10% down. As little as 3% down can get you into a home and get you started on home ownership. Another thing that we talk about a lot is credit scores. People believe that their credit scores are in a place that will stop them from buying a home, and that's just a misnomer. There's a couple of things that you need to consider. FHA loans will allow you to have as low as a 580 credit score. 580s meaning that you've basically been missing payments on credit cards, you're a little bit flaky on some of your debts. At the end of the day, there's still a loan product out there for you, and you can still put as little as 3.5% down. Now your rate will be affected in certain products and programs. Your rate's going to be a little bit higher, but if there's a benefit for you, if there's a great write-off opportunity, if you're taking advantage of this low rate environment, or if there's a special opportunity to buy a house down the road that is maybe undervalued, that's when you might take the jump. I think I feel like a lot of people will wait until they're ready to buy a house, and there's never a ready time. You just need to be able to feel comfortable with the thought, and feel comfortable with the idea, and then do the due diligence, do your homework, to find a solution that'll get you into a home sooner than later. Outside of those three factors, I think that what we hear a lot about is income, and do I make enough money. Well, you won't know if you make enough money to qualify until you talk to a loan officer. You talk to them about your wants and your needs and the type of home that you want to buy. But I also think that it's a great tool for you to identify how much money that you need to make in order to qualify for that home. What I like about real estate as a wealth creation tool is, if you look at how to progress in your business life and as an adult, having good credit, having a good solid job foundation, having some money in the bank. Home ownership is a system that puts you into a place where you can set those goals, set these requirements for your own life, to get you ready for home ownership and get you on the process of creating wealth in your life. So I think a lot of people are always thinking they have to be perfect, and there's just not a day where you're going to have exactly the income you want, and that you're going to really feel like you can afford it, and that you feel confident about the money that you have in the bank, so the idea is to get rid of these subconscious ideas and the mindset that you can't, and figure out how you're going to get there. Where are we going to start? Are we going to start in the starter condo, or are we going to buy a mansion right out the gate? The fact is that where you're living now, you're not going to be able to afford what you want. The key about life is to progress and build steps. Get into something now that you can afford, that you can build equity in, and then sell that and use those proceeds to get into the house that you want. You need to look at the longterm plan, the vision of your life, the vision of what you want out of wealth creation, and by doing that, start taking the steps now, get the ball rolling now, of identifying what you need to do to get you to that step. So I hope these tips will help you. At the end of the day, you're never going to know if you're eligible to buy a home until you talk to a loan officer, talk to someone like myself, that'll give you the tips and tricks, will give you some ideas of where you stand in the marketplace, and then from there, we'll create a plan and a goal for you to attain. When the time is right, you'll be able to buy a house. I hope you enjoyed this, and reach out to me any time at justinpurpero.com.