The day I closed on my first home was met with mixed emotions. On one hand, I was excited to take a big step in my life and towards my financial goals. I had found the perfect investment property that would serve as my primary residence for at least the next year—a cute little bungalow in an area that was sure to significantly increase my property value in a few years.
Yet, there was a bit of anxiety as I walked through the door. Was I making the right decision? Would buying this home be a blessing and not a curse? Would I be cleared to close, or would one final run of my credit report show something that would stop me from being able to purchase the home?
I swallowed my fears, said a little prayer, and proceeded with the process of signing on the dotted line. The home was officially mine, and getting the keys to my new abode brought a wave of pride. But as I would later discover while making my new house a home, there were many things I wished I had considered before buying my first home, and even more so now that I’m in my second one.
“Purchasing a home is a beautiful experience,” shares Lauren Cobb, realtor at Keller Williams Peachtree Road in Atlanta, Georgia. “I’ve seen real estate change the lives of many clients, including myself, by buying at the right time and within budget. It’s also a unique experience for each buyer. No buyer has the same experience as their family or peers.”
With that in mind, here are five tips I wish I'd known before buying my first home.
1.The underwriting process is thorough; they will examine everything.
The underwriting process for my first home went relatively smoothly. I had just gotten out of debt and had a great credit score. I’d been at my job for four years, so I could show consistent income. I didn’t have any student loans or car payments to consider, and I didn’t anticipate taking on any new debt. I was glad I had worked hard to get my finances in order before going into underwriting. But it’s not always that easy, and here’s why.
Once you get pre-approved, you should generally expect your lender to ask for one month of pay stubs, two months of bank statements, and two years of W-2s to start the underwriting process. This can vary depending on the type of loan you’re going for, where your income comes from (W-2, your own business, etc.), and the industry you work in. During this time, you shouldn’t take on any new credit as they will compare your original credit report to the one pulled right before closing.
In HGTV host Egypt Sherrod’s book Keep Calm, It’s Just Real Estate: Your No-Stress Guide to Buying a Home, she shares that “banks approve you for your mortgage based upon your credit score and savings at the time of approval. Your approval is contingent upon those items remaining the same through closing.” In other words, any new additional debts will impact your loan from closing. Even something as simple as using Afterpay or Klarna will be treated as an installment loan, and you will be asked to provide documentation for that transaction.
I recommend not making any major purchases before you close on your home as it can determine if you get a final approval to close and the interest rate. This will make your process much smoother, and you will be more likely to see the sweet words “Please see your attached final CD,” letting you know that you’ve successfully cleared underwriting and are approved to close.
2.Property taxes and insurance can significantly increase your monthly payments.
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One of the main reasons that many of us buy a home is that we’re hoping to escape the neverending rent increase that we’re presented with at the end of our lease. While a fixed-rate mortgage offers predictable monthly payments, what’s not often shared is how property tax and insurance increases can impact your mortgage payments.
I admittedly was caught by surprise when last year my mortgage went up by $400 because the county assessed my property value to be higher than years prior. If you purchase a home in an area where homes increase in value at a faster rate than others, you may find that the increased equity that you’re celebrating comes at a price, and depending on your budget that price may make or break whether or not you can still afford the home.
One way to combat rising property costs is to look into your state’s homestead exemption laws. According to the National Association of Realtors, the homestead exemption, at its core, “reduces the taxable value of a homeowner's primary residence, meaning a portion of the home value will not be taxed. This reduction results in lower property tax bills.” This exemption only applies to your primary residence and the requirements vary from state to state, but if you do qualify, it can save you from extreme hikes in property taxes and thousands of dollars over time.
3.Your mortgage impacts your debt-to-income ratio, affecting your ability to qualify for other credit.
In an ideal world, your mortgage would be less than the cost of rent you were proverbially shaking your fist over. But in reality, that’s not always the case. Due to high interest rates, the increasing cost of homeownership, and the type of home you’re looking for, you may find yourself paying more than you were before in rent (but hey, at least it’s going toward something that could potentially be an asset one day, right? Right?!).
Your lender may approve you for a higher monthly payment, but it’s not until you move into your lovely abode and attempt to apply for new credit or even refinance months or years down the road that you learn that with a higher monthly payment, you’ve also increased your debt-to-income (DTI) ratio. This is a number that lenders use to determine if you’re a good candidate for credit approval, and even a couple of hundred dollars can push you beyond the DTI they’re comfortable with approving.
If your income is increasing and you’re not taking on other debt, this may not be an issue for you. But as we all know, life happens, so it’s always good to be prepared and to plan accordingly in case you find yourself in need of credit in the future.
4.Ask the seller for a credit to help lower your out-of-pocket costs.
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One thing that held me back from buying sooner was assuming that I would need a lot more cash available for closing. While you should always be prepared to pay the estimated closing costs shared with you by the lender, it’s good to know that the final amount may be higher or lower than what is on the final Closing Disclosure (CD). One way to potentially lower that amount is to negotiate a seller credit.
A seller credit is money that the seller gives the buyer at closing, usually lowering your out-of-pocket closing costs. The main way to negotiate this is to use your inspection report to get an estimate of the cost of any repairs that the report highlights. For example, when I purchased my home, I knew from the inspection report that the HVAC was 18 years old and would need replacement soon. I reached out to a few different HVAC companies to get estimates on the cost of replacing the unit and used the highest estimate to negotiate with the seller to cover the cost of replacing the HVAC. I did the same with a few other needed repairs, and the seller agreed to contribute a $10,000 seller credit to cover these costs. This reduced my closing costs from $24,456 to $14,456.
Sometimes, the seller will even offer a credit upfront to incentivize the buyer to go under contract, especially if the home has been on the market for some time and/or they are looking to sell quickly. While these deals aren’t always easy to find, nor are sellers required to provide them, it’s good to know that it’s a possible option in case you’re looking for a way to lower your out-of-pocket costs.
5.Negotiate with the seller to buy down the interest rate.
Anyone who has been home shopping in the last couple of years can attest that current mortgage rates are high compared to rates during the pandemic, which, according to Investopedia, reached as low as 2.65% in January 2021 for 30-year, fixed-rate mortgages. Even a small increase in your mortgage rate can significantly raise your monthly payments and potentially price you out of your desired home. But there’s good news!
Similar to a seller credit, you can potentially negotiate a rate buydown with the seller. A rate buydown allows the buyer to secure a lower interest rate by having the seller pay the lender to reduce the interest rate. For example, you may have locked in a 7.5% fixed interest rate with your lender, but thanks to your realtor negotiating a buydown with the seller, they are willing to contribute enough money to lower your rate to 7%. Sellers are sometimes motivated to do this as it can often be cheaper than lowering the price of their home. A lower mortgage rate can significantly reduce your monthly payment and save you thousands of dollars over the lifetime of your mortgage.
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Navigating the home-buying process can be overwhelming, but understanding these key factors can help you make more informed decisions and save you thousands of dollars in the long run. Keep these tips in mind to ensure a smoother, more rewarding home-buying experience.
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Ding. Ding. DING.
A life coach by the name of Thomas Leonard once said that “Clarity affords focus” and, believe you me, when it comes to dealing with other human beings, if you don’t get clear on where you stand when it comes to your interactions with them, you can very easily find yourself “focusing too much” on those who don’t deserve it and too little on those who absolutely do. And y’all, this lil’ PSA couldn’t be more relevant than when it comes to what I call “casual friendships.”
Let’s dig — and for some of us, dig our way out of — what it means to have a casual friend, so that you can get clear on if you really need those in your life…and if so…why?
Article continues after the video.
It Can’t Be Said Enough: Always Remember What “Casual” Means
GiphyThere’s a reason why I decided to share two videos by mental health coach Isaiah Frizzle at the top and bottom of this article. It’s because a lot of what he shares in both of them complements a piece that I wrote for the platform last year entitled, “This Is Just What Purposeful Relationships Look Like.”
It’s the author M. Scott Peck who once said, “Until you value yourself, you won't value your time. Until you value your time, you will not do anything with it” and please believe that the older (and hopefully more mature) you get, the more you tend to see just how valuable — and fleeting — time is; and that is what plays a huge role in motivating you want to only involve yourself with people, places, things and ideas that will honor your time — and when something is casual? In my opinion, it’s highly debatable that it’s worth much of your months, days, hours, or even too many of your minutes.
The main reason why is addressed in an article that I wrote back in the day entitled, “We Should Really Rethink The Term 'Casual Sex.'” The gist? When it comes to relationships, “casual” is certainly not a favorite word of mine because I know what it means. Have mercy — why would you want to invest your time, energy, and emotions into something that is, by definition, apathetic, indifferent, careless, lacking emotional intimacy, and/or is without purpose?
I don’t know about y’all but that sounds like a complete and total crap shoot to me — especially if you are going to go so far as to consider this type of dynamic a true friendship (check out “Ever Wonder If A Friend Is Just...Not That Into You?,” “6 Signs You're About To Make A Huge Mistake In Making Them A Close Friend,” “5 Signs Of A Toxic Friendship That Is Secretly Poisoning Your Life,” “12 Friend Facts That Might Cause You To Rethink (Some Of) Your Own,” and “Less & Less Of Us Have Close Friends These Days. Why Is That?” ).
To me, when you decide to call someone “friend,” it means that they are loyal, reliable, consistent, trustworthy and willing to be there to support you to the very best of their ability — even if it’s inconvenient to do so sometimes (check out “Life Taught Me That True Friendships Are 'Inconvenient'”). How in the world can you expect that from something that has the word “casual” in it?
And you know what? That actually segues into my next point about casual friendships pretty darn well.
Ponder the Purpose “Casual Friends” Serve in Your Life
GiphyA couple of years ago, Verywell Mind published an article entitled, “How the 4 Types of Friendship Fit Into Your Life.” The four that it listed were acquaintances (which I actually don’t consider to be friends; check out “6 Differences Between A Close Acquaintance And An Actual Friend”), casual friends, close friends, and lifelong friends. After reading the piece, I think they consider casual friends to be the “pleasure” friends that I mentioned in the article, “According To Aristotle, We Need ‘Utility’, ‘Pleasure’ & ‘Good’ Friends.”
And although I certainly get that, I think my “cause for pause” is calling those people “friends” when they probably should be called something like an associate or possibly even a buddy instead. Why do I feel this way? Well, I’ve shared in other articles that I think social media has jacked up vocabulary words and their true meaning on a billion different levels.
Take “friend,” for example. Facebook had us out here calling everyone we connected to on their platform “friends” when some of them, we’ve never even spoken to before — and I personally think that influenced, affected and perhaps even infected our psyche to the point where we will call folks, both online and off, “friend” even when they haven’t earned it and/or who possibly don’t deserve it.
That said, do I think that we all could use lighthearted interactions that don’t go very deep and are filled with not much more than fun? Sure. However, if we were to move this over into a sexual thing — those types of people would probably be called a sneaky link, and there is nothing significant or substantial about ‘em. In fact, if anything pretty much automatically comes with an expiration date, sneaky links would have to be it.
And that’s kind of the point that I’m trying to make about a casual friend — so long as you know that the word “casual” is being used to describe them, while you may enjoy the people who fit that bill, they aren’t really anything that you can or even should fully rely on. Instead, take them for what they are and don’t really expect much more than that. Otherwise, you could be in for some profound levels of disappointment. And who wants that?
Final point.
How a Casual Friend Can Become a Huge Red Flag
GiphyI’m telling you, y’all gonna quit clowning Tubi. LOL. To me, the best way to describe it is it’s the Cricket of current streaming apps. What I mean by that is, back when Cricket (the cell phone service) first came out, people, like me, who used it service got incessantly clowned because it was seen as a bootleg provider. Now it’s owned by AT&T, and as someone who has rocked with them since I was in my 20s, I don’t have one regret for doing so. Cricket has always been good to me, chile.
And Tubi? Well, when you get a chance, check out CNBC’s article, “CEO at 33, Tubi’s Anjali Sud on success hacks she learned at Amazon, IAC on way to top of Fox streaming” — take note of the moves the streaming app is making and the quality of programming that is transpiring in real time.
Anyway, I find myself bringing up Tubi more and more in my content because it helps to amplify some of the points that I like to make. This time, it’s a movie that’s (currently) on there calledRight Man, Wrong Woman. If you haven’t seen it before, I don’t want to give too much of the film away. What I will say is that the main female character, she had a casual friend and then she had a close friend.
That casual friend—the one who liked to kick it all of the time—was a lot of fun; however, dealing with her came with a ton of semi-unforeseen consequences. Meanwhile, the close friend? She’s what the Aristotle article (that I mentioned earlier) would call the “good friend” because she tried her best to hold her friend accountable.
And really, it shouldn’t be a shock that the casual friend turned out to be a plum trip because if someone is loads of entertainment and pleasure and yet they are indifferent towards you, they make careless decisions around you and/or they don’t really make known the purpose for you being in their life other than to pass some time — where really do you and that person have to go past drinks after work or dinner on a rooftop restaurant from time to time? And if that is all that the two of you are doing, again, why are they deserving of the word “friend”?
Hmph and don’t get me started on the lack of reciprocity that typically transpires when it comes to dealing with people like this because, while they won’t mind you spending your coins on them, taking their calls in the middle of the night or listening to all of their issues — when it comes time for them to show up for you, they very well may gaslight you into thinking that you are being dramatic, clingy or “doing the most.” Why? Well, it’s mostly because the two of you never really established what the hell the both of you are to one another.
And so, while you’re somewhere taking them seriously, they are out here seeing you casually, and as much as it might hurt to hear, that doesn’t automatically or necessarily make them a bad person. You shouldn’t expect much where no clarity is involved. After all, casual is just that: CASUAL.
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I’m hoping that you can now see why I entitled this piece in the way that I did. It’s because a red flag is pretty much a warning, and to me, a casual friend is about as big of an oxymoron (again, to me) as casual sex is. Friends and sex are both too intimate to be seen or treated casually. Oh, but if you step out and take that risk, you could find yourself getting far more involved than the other individual ever wanted to go, because casual is how things have always been. “Friend” was simply to get you more mentally and emotionally invested. SMDH.
American columnist Walter Winchell once said, “A real friend is one who walks in when the rest of the world walks out.” A wise person once said, “One good friendship will outlive forty average loves." Former President Ulysses S. Grant once said, “The friend in my adversity I shall always cherish most. I can better trust those who helped to relieve the gloom of my dark hours than those who are so ready to enjoy with me the sunshine of my prosperity.” Does any of this sound casual to you? Yeah, me neither.
Again, I’m not saying that you shouldn’t have people in your life who aren’t on deep levels. I’m just saying that you might want to consider putting them into another category than friend, because what friends do for people? There ain’t nothin’ even remotely casual about it, sis. Not even a lil’ bit.
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