Homeownership
Hello Mentees, you asked so I delivered! A lot of mentees ask about my home buying experience so I decided to do this month’s blog on homeownership. I became a homeowner by divine design. On Thursday, September 11, 2014, my apartment in North Druid Hills (1.5 miles away from Lenox Mall in Atlanta, GA) was broken into. They kicked in 4 of my neighbor’s doors as well. They stole a lot of my valuables but they taught me an even more valuable lesson. I was grateful I was at work, they didn’t take my dog, and they didn’t take as much as they could have. The apartment complex was already in the process of trying to raise my rent for $844 to $1125 to resign my lease. Even after the break-in they only offered to move me to another floor and still raise my rent over $100 per month. That is when I started looking into homeownership. I closed on my first home, a 2-bedroom 3-bath townhouse on December 4, 2014. I always had the thought that you waited until you were married to buy a home but God saw fit for me to own without a husband yet. What seemed like a bad thing turned into a good thing. The money I received from my renter’s insurance served as my closing cost. Nothing but God, He always has a plan in the midst of what seems like a storm.
I have had a great homeownership experience but there is a lot that goes into it. Even after you close there is a lot of personal responsibility that you do not think of initially. For example, if you move into a house (not a townhouse with an HOA) you are responsible for your own grass, home improvements, home repairs, appliances that break, and yard work. But even with a townhouse all apply except I have an HOA that I pay monthly that takes care of the grass and picking up the trash. It is still an additional expense.
I wanted to bring in an expert to answer all of your questions and give you a new perspective. I hope this answers all of your questions. Her name is Quiana Watson she has her own real estate business, her brokerage is Palmerhouse Properties & Associates in Atlanta, GA. Her website is www.quianawatson.com and her Instagram handle is: @quianatherealtor she is the Carrie Bradshaw of real estate! Below is a Q & A to help you ladies understand the whole home buying process.
1. What made you get into real estate?
I decided to begin a career in real estate about eight months after moving to Atlanta, G.A. I moved to this city right after completing my bachelor’s degree in Business Administration with a marketing focus. I was offered a marketing position which I soon discovered was a cubicle position in which I cold called people daily. I met some beautiful women who were wearing designer clothes and just looked like they were doing well in life. I found out they were all real estate brokers and that is how I decided to begin my career. My first brokerage was owed by women and they really trained me and took me under their wing. That was back in 2006 and I have been in the real estate field ever since.
2. What is the best advice for young women considering homeownership?
Assess your budget and decide based on your current situation. Make sure you a have an agent that has a vast understanding of current market trends and appreciation values. Gone are the days that women have to wait for a man to become a homeowner. Buy your home, eat the cake, take the trip and live your life to the fullest.
3. How do student loans impact the home loan process?
The rules have drastically changed for the current home buyer. Student loans are counted into your DTI (debt to income ratio) and deferred loans will be counted at 1%. For example: if you owe $100,000 x1%=$1,000, that will be the amount that is counted against your monthly DTI. This will lower the amount of home you can afford. The only work around is to begin a payment plan so that the actual amount is used against your DTI, not the 1%.
4. Can you list the steps to the home buying process?
There are so many steps in the home buying process but a general idea is the following:
1. Find a reputable real estate professional
2. Get pre-approved for the mortgage
3. Find your home
4. Place an offer
5. Offer accepted!!
6. Verify documents with your lender
7. Close on the home!
5.What is the most common mistake in the home buying process? And how can one avoid it?
The biggest mistake I find is not being truthful with your documentation/income. In order to obtain a mortgage, all of your information will be verified by a third party. You have to be truthful upfront because misleading information will always halt your home buying opportunity.
6.What other things should one keep in mind when becoming a homeowner vs. renting?
As a property renter, you will not acquire any equity. What is equity? Equity is the value of ownership built over time. Let me break it down for you. Ex. You purchase a home for $100,000.00. Three years later you decide to sell your home. You have it appraised and now the home is worth $165,000.00. You place it on the market and sell it for $165,000.00 you just made a profit if $65,000.00. Are you following me now? You must be prepared to become a homeowner because you are responsible for the maintenance of your home. When you rent you have the luxury of contacting your landlord to repair any issues which are a plus if you are not financially secure. I feel that home ownership in the right property should happen sooner than later.
7. What tips could you provide on saving money?
You can only save what you don’t spend. I feel the best way to accomplish a savings is to live below your means and establish a budget. There are so many apps that can help you save money but I believe the old-fashioned way is best. Write out a budget and stick to it. If your company offers direct deposit have a certain amount go directly to your savings account that way your money is saved immediately. The best tip of all is, “don’t keep up with the Jones”. Congratulate those who have accomplished what you desire while you prepare and work to achieve your goals.
8. What advice would you give the mentees looking to become a realtor?
I truly enjoy working in the real estate field. You should take some time to learn the business by doing research. Trust me, “Google” is your best friend to learn the basics. If you still want to pursue a career in real estate after doing your research consider starting out part time. Keep in mind being a REALTOR® is very expensive. You will pay for your broker’s dues, marketing, and lead generation out of pocket. This is a commission based business and I would never tell anyone to leave a salaried position without first trying it out part time. This is a great business with unlimited income potential. Just make sure you plan accordingly before you get started.
9. About how much should a person looking to buy a home have saved up?
Depending on the program you qualify for you could spend as little as $1,000.00 out of pocket. My rule of thumb for the average homebuyer is $10,000.00 should be I your savings account. Depending on the sales price of the property your out of pocket expense could be much less. But you want a nest egg to ensure any unexpected costs can be covered.
What other cost are associated with homeownership? (Including during the process and after for example, closing cost, homeowner insurance, HOA, property taxes, home repairs, home appliances, down payment, etc.)
When you purchase a home you are responsible for all of the above costs for the most part. I would like to give you an example. It’s much easier to follow this way. Let’s say you purchase a townhome for $150,000.00. Well if you acquire an FHA loan, which is the most lenient loan type, then you will have to pay 3.5% as a down payment. This equals to $5,250.00. You must pay your closing costs. Closing costs are essentially your first year of homeowner’s insurance, taxes, title fee’s, attorney fees, HOA activation fees, loan origination fees, application fees, and your first-month mortgage. Closing costs estimated to be around 3% of the sales price. For this example, the closing costs amount to $4,500.00. You add the down payment and the closing costs you’re out of pocket expense is $9,750.00.
10. How does credit score impact the home buying process?
Having a low credit score will increase your interest rate. A higher interest rate will mean a higher monthly payment and you will pay a higher interest on your principle. What is the ideal credit score for home buying? I would prefer to see clients purchase a home with at least a credit score of 660. To qualify for down payment assistance in the Metro Atlanta area your minimum score must be at least a 640. At 660 credits score, you will be able to obtain a competitive interest rate and be in the position to obtain down payment assistance. How can young women improve their credit score? The best way to increase your credit score is to pay your bills on time. If you have credit cards keep the usage at less than 20%. And most of all monitor your credit for any discrepancies.
11. Is there any other information you can provide to young women looking to become homeowners?
I feel that as a young woman you should aspire to become a homeowner. Real estate is the can be used a wealth building tool. Think about it like this you have an asset that appreciates in value that you can pass down for generations to come. Think of a vehicle you really wanted ten years ago today it’s not worth half of what it was then. Real estate will appreciate with time. Whenever you are in doubt about becoming a homeowner remember this one very important fact. 90% of all millionaires become so thru owning real estate.
If you have any additional questions I would highly suggest you attend her home buying seminars if you are in the Atlanta, GA area. In addition, take some time to research homes, cost, savings, check your credit score with credit Karma, and save your money. The biggest things you can do research, work on your credit score, and SAVE! Start off by paying off your smallest credit card balance and pay the minimum for the rest then keep working until you pay them all off. You can do it, just takes determination, hard work, and the will-power.
