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March 2, 2023
Fire your landlord in 2023
Fire Your Landlord in 2023!
If you are tired of paying your landlord’s mortgage and have decided that 2023 is the year you are going to start building your own wealth and not your landlord’s, then pay attention! I am going to share exactly what you need to buy your own home in 2023.
Why is this important? Owning a home allows you to fix your housing costs for the most part rather than be subject to inflation and rising rents. While it may be a bit more cash flow required to own a home initially when compared to renting – once you fold in the benefit of being able to deduct mortgage interest and property taxes it helps a little bit. Then you when you have a fixed mortgage and five or 10 years go by – your cost of ownership can be less than market rents and will only get better over time. So lets talk about a few things to pay attention to as you get started.
Why is this important? Owning a home allows you to fix your housing costs for the most part rather than be subject to inflation and rising rents. While it may be a bit more cash flow required to own a home initially when compared to renting – once you fold in the benefit of being able to deduct mortgage interest and property taxes it helps a little bit. Then you when you have a fixed mortgage and five or 10 years go by – your cost of ownership can be less than market rents and will only get better over time. So lets talk about a few things to pay attention to as you get started.
1. What’s Your Credit?
Your credit score is an important part of the home buying process. It’s a measure used to gauge how financially responsible you have been and provides information on how your credit profile fits withing lending guidelines set forth by Fannie Mae or Freddie Mac and how it impacts lending you money for your new home purchase.
A good score can open up options and lower the interest rate on your transaction. If your credit isn’t quite where it needs to be, starting early and spending time to improve it can be worthwhile. We can do a “soft pull” of your credit and then come up with a plan that may include paying down existing debt, making all payments on time, and monitoring your credit report so errors can be corrected. It may also help to open a few new credit card that you use responsibly over the next few months as well.
Many first–time home buyers worry their credit score may be too low to qualify for a mortgage. The best way to squash this worry is to find out your credit score and as part of the process of getting pre–approved for your mortgage is the first thing we will do is to check. You cannot rely on the score you receive on your credit card statement as that is a consumer score versus a mortgage score – it’s a different scale, very confusing.
2. Proof of Income and Assets
Next, you will need to provide proof of income and assets. This means you will need to share your most recent pay stubs, tax documents, and any other support that show you have a steady source of income that is expected to continue into the future. Start a folder on your computer now that includes paystubs, tax documents and bank statements (all pages)! Your lender will be asking for these when you get pre–approved,
so best to get organized now. Remember to include collecting statements for your savings account, checking account, investment accounts, student loan repayment, etc.
If you’re a salaried employee, proof of income means showing pay stubs and a year–end W–2 statement. If you’re self–employed, you’ll need to show tax returns and evidence of your business. And, if you are just getting started on your first job out of college, that’s ok. You will need some additional information like your college transcripts and offer letter, but if you have a down payment and good credit, you may be able to get into a home, we can help figure that out with you.
Cash Needed to Close on Your Home
Finally, you need to understand the cash needed to close on your home. This includes
money for down payment, title fees and other closing costs and other cash to close
items that come with purchasing a home.
Finally, you need to understand the cash needed to close on your home. This includes
money for down payment, title fees and other closing costs and other cash to close
items that come with purchasing a home.
Your lender will provide you with an estimate of your total closing costs including taxes, title insurance and transfer fees. One part that is often overlooked is you will have to pay your first year homeowners insurance policy, the partial month of interest and, if you have an impound account for taxes and insurance you have to fund the initial balance at closing.
By following these steps and staying organized throughout the process, you’ll be in great shape this year when it comes time to fire your landlord. If you’re ready to take the plunge and make 2023 the year you buy your first home – follow these steps. Once you have all the details settled, don’t forget to have fun during the home–buying process. After all, this could be your dream home!
I’d be honored to help you get into a new home in 2023.
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