Equity Matters: Building Wealth Through the Art of Homeownership
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For most people, buying a home is the most important financial decision of their lives. So, the question is… is there an art to homeownership that could ease apprehension and help homeowners find success; An aptitude to remove the fear, anxiety and uncertainty and replace it with excitement, confidence and motivation?
We’ve all heard the traditional steps to homeownership:
Prepare your credit, get pre-approved with a Mortgage Consultant, find a Realtor, buy a home and move in! But what about the everything else surrounding the transaction? How can we truly prepare to become prosperous homeowners? 1. Dream a dream and have the right mindset – When you have a goal, sometimes it can be less popular than the traditional route taken by your friends, co-workers and neighbors. Making the hard decision to pursue your ambitions and surrounding yourself with like-minded individuals can make the difference in bringing your desires to fruition. Each day needs to be viewed as another opportunity to taking one step towards making your aspiration a reality. Don’t be afraid to say no to the things that will lead to yes!
2. Put the cart before the horse Contrary to belief that buying a car is a credit stepping stone, it affects your credit score and impacts your debt to income ratio which, in turn, will alter your buying power when purchasing your home. In fact, the choice between the home and the car is a powerful decision and one could be a sacrifice to the other. Where a home generally appreciates over time, a car generally depreciates. Thus, keeping your old, but fully-paid off car is in your best interest when trying to qualify for a home loan. Your financial well-being is not only a product of a million small choices, but also, two or three big decisions. So, make sure to save that dream car for after your home purchase so you can maximize your strengths.
3. Know your limitations – One of the most challenging things we must come to terms with when facing our finances is that we must work within the reality of our financial circumstances. Debt, income level, external expenses and lifestyle – they have a real-time impact on our decisions and ability to purchase real estate. Especially in a high cost state like Hawaii, where the current median home price is currently $835,000 it is easy to overextend yourself. The key is to purchase a home well within your income limits so you can maintain cash reserves for the unexpected occurrences and maintenance that is required to be a homeowner.
4. Build the right Team – When embarking on a new journey, you must survey the scene. Knowledge is power. There is no possible way to truly become an expert in every field required for home-ownership. That is why the art of homeownership requires the platform of surrounding yourself with a trusted team of experts to guide you to victory. This team includes your mortgage consultant (loan officer), real estate agent, escrow / title officer, insurance agent, CPA and possibly a contractor or attorney. This allows you to make more educated and confident decisions throughout the process of becoming an effective homeowner. In reality, the transaction of purchasing the home itself is only ten percent of the value of your assembled Team. Thirty percent of the Team value comes before you buy the home; through education, fear removal and motivation. The remaining sixty percent of the value comes after you purchase the home; by helping you to grow your wealth and make smart decisions about leveraging your asset to provide for the things you care for and want most in life – whether it’s to build your empire or fulfill your legacy.
5. Start early, start smart – As the saying goes, most people overestimate what they can do in one year but underestimate what they can do in five years. Sometimes, waiting for the “perfect” time to do something can lead to delays in achievement. By starting your journey sooner rather than later, you can often be surprised by how far you’ve come over time. Don’t wait for the perfect moment, take the moment and make it perfect for you by creating it with your competence and aptitude.
Questions for Judy Meredith, the Mortgage Professor? Email your questions, I’d welcome the opportunity to help you find firstname.lastname@example.org.