*Realtor Terrica “the Credit Score Queen” Matthews recently spoke to Blavity to explain what it takes to become a homeowner in the United States.
Per the outlet, citing Bankrate.com, “Asian and Hispanic homeownership rates have had the highest climb in the past decade, but Black homeownership rates remain under 45 percent.”
So, what to do if you are struggling to buy a home amid rising mortgage rates and skyrocketing rents? Below are some tips from Matthews on how to make sense of this crazy real estate market.
READ MORE: BLM Co-founder Says Black Homeownership Helps Disrupt ‘White Supremacy’
via Blavity:
Get help if your credit score is below 700
Matthews, who is licensed in Louisiana, said that understanding your credit is essential to getting ready to buy a home and that you should consider working with a legitimate credit counselor anytime your score is below 700.
“The biggest mistake people make with their credit is co-signing for those who already have poor credit,” Matthews told Blavity. “Also, maxing out their credit card balances.”
Matthews suggests using Credit Sesame as it will paint the best picture of what your FICO score really looks like.
Student loan debt won’t necessarily stop you from owning a home
The student loan crisis in the United States has a lot of potential buyers stuck in so much debt that taking on another loan can feel like an impossible feat. But while so many people struggle with this sort of debt, having student loans doesn’t exactly rule you out of the home buying market.
“Student loans are calculated into your debt-to-income ratio,” Matthews said. “I wouldn’t say that it would automatically stop one from qualifying, but it may impact the amount of home loan you may qualify for.”
So, the idea is that if you can qualify for enough to buy a home, you should consider foregoing your dream home for your first purchase and get something that can help you build equity or passive income as you work toward a bigger purchase at a later time.
Saving money means going without
Matthews also suggests side hustling or another avenue of passive income.
“An easy way to save for a down payment and closing costs is to increase your income through a side hustle and or to cut out unnecessary spending,” she said.
The good news is that you don’t need as much money to buy a home as you may think.
“There are various down payment assistance programs but those usually come with a higher interest rate,” Matthews said. “If you are seeking FHA financing, which is a very popular program, you will need a down payment of 3.5 percent and closing costs of 2 to 5 percent.”
Homeownership is not unattainable, but it’s also not an easy road
The reason why real estate experts emphasize starting small, if you need to, is that you can start to enjoy the benefits of homeownership at any stop.
“The most obvious benefit is from the financial realm,” Matthews said. “Homeownership allows you to build equity and wealth. As you pay off your mortgage each month, you will be building equity in your home. Also, as your property increases in value, so does your equity, which allows you to sell and reap a lucrative return on your investment.”
“If you have the ability to keep a roof over your head, that in itself is a blessing,” Matthews said. “However, I do see rent-shaming often and it is very disheartening. I do not believe that there is anything wrong with renting as long as it is not a long-term goal. The reason I say this is because through renting it is impossible to build generational wealth and equity. Your family can’t inherit or financially benefit from your apartment lease.”
Checking off your list
Once you’ve gotten your credit in order, figured out your savings plan, understand the market and are ready to shop, you should begin by interviewing three realtors.
“Make them work for your business,” Matthews said.
Keep in mind that a licensed realtor is vital when you are buying, selling and investing in real estate.
“We advocate for your best interest and ensure that everyone involved is operating in compliance with real estate law, rules and regulations,” Matthews said.
Follow Matthews on Instagram at @terricaismyrealtor for more financial facts and real estate musings.
We Publish News 24/7. Don’t Miss A Story. Click HERE to SUBSCRIBE to Our Newsletter Now!
