The Realities of the American Dream

      One of my long-time passions, besides travel and wellness, is real estate. I'm switching gears today to write about it! Buying a house may be the "American dream", but I personally don't think that owning a home is for everyone. I don't believe that any one path is right for everyone. I think our strengths and weaknesses vary drastically, and for good reason.

      There are certain qualities that I think are imperative for a homeowner to possess:

            1. Self control to live within your means and maintain emergency savings

            2. The ability to problem solve

            3. Common sense and basic handyman abilities

            4. A network of knowledgeable and trustworthy people

            5. The discipline to pay current bills in a timely fashion

      Even the newest houses or the best systems can sometimes have issues. Maybe the roof springs a leak, the boiler goes, you have a pest problem or the basement floods. If you didn't save some extra money, you might end up scrapping to make ends meet. Before you buy a house, you should have enough money in the bank for your down payment and closing costs, and then some. Luckily, there are loans that accomodate a modest down payment. If you're a single person purchasing a house, you might want to consider what would happen if, for some reason, you were out of work for a couple months. Would you be able to pay your mortgage? Thinking ahead about these things is important; defaulting on your loan could result in late fees, foreclosure and losing your home, which could hurt your credit for any future financing needs.        

     There are many other things to consider in buying a house. How much will your bills be each month/year/quarter? Factor in the property tax, school tax, electric/heat, water and sometimes even garbage and village tax. If you're a part of a homeowner's association, add that in there too. Maintenance will be needed in order to protect your investment, so add that expense if you aren't willing or able to do the work yourself. There are a lot of scam artists out there who will take your money and "cob" your project, which is why I think a network of knowledgeable and trustworthy professionals is so important. Calling someone off google or choosing the cheapest option could cost you more in the long run. 

      There are some financing options out there that require very little down for a down payment. FHA loans typically require 3.5% down and sometimes you can roll in your closing costs instead of paying them out-of-pocket. Mortgages are structured so that you pay more interest in the beginning of the loan and more toward principal as you make your way through the loan. The more you put down, the less you finance, and the less interest you'll pay over the course of the loan. 

      I have plenty of people in my life who are not good at paying bills or saving money. I was a Senior Credit Manager for Wells Fargo for my first job out of college. I worked with people with $20,000+ in credit card debt. Some people spend way above their means, cut corners on the important things, or treat bill-pay as an option. This is why I don't think everyone will do well in owning a home. Don't get me wrong, I think people can change and learn and grow and get better. However, I think that many of the past issues with the housing market had to do with banks approving loans that were above buyers' means. I once worked with a seller who took out a line of credit using the equity in their home to have a fancy wedding for their daughter. When it came time to sell, the property wouldn't sell at the price they wanted it to because it hadn't been maintained or improved. Plus, they maxed out the value so the sale price had to cover both the mortgage and the line of credit. In order to make a deal work, they would've had to pay the difference out-of-pocket! It took them years to sell their house without the means to make necessary improvements or come down on the price.
     The First Home Club in New York matches $4 for every $1 you save in a specific account with a participating bank, up to $7,500 over the course of 2 years. You'll have to go to a few classes, but I've heard it's a great program. Plus, it will give you a year or two to save up! Shop around for a mortgage lender you like and trust; ask friends and family to refer you to theirs. Having an experienced real estate agent can be helpful too!

      If you're financially responsible, owning a home can be a wonderful thing! In some areas, you can own for a similar amount as renting. Plus, it's like a savings account as you pay down your mortgage and gain equity. So, if you dream of being a homeowner, be sure to save up, do your research, talk to some professionals and look into special offers that might be available to you!