By Valerie Mickiewicz, JWI
JWI’s Young Women’s Leadership Network hosted an event on Wednesday, May 14 for potential homebuyers to learn about the ins and outs of the (often confusing) process. Our YWLN frequently offers skill-building workshops, just like this one, to develop personal and professional skills; this one was the first in a series of financial literacy workshops for Jewish women in their 20s and 30s. Although homebuying seemed like an abstract goal for my future self, the presentation taught me that it can take more than just a few months of planning and it’s never too early to start saving. Who wants to throw money away on rent, anyway?
If your first thought is, “Where do I even begin?” – you’re in luck! Here are some of the most helpful tips we found to get you started:
1. Know what you can afford! Carefully assess your finances and reexamine your budget before beginning your search – it’s critical to have all your ducks in a row before diving in. Make a budget and calculate your monthly income and expenses to determine the monthly payments you are comfortable with. If you have difficulty allocating your money, just follow the 50/20/30 rule. 50% of your budget should go to necessities, but not just housing. That also includes utilities, groceries, transportation, etc. Our experts recommended that no more than 26% of monthly after-tax income should be used to pay all housing costs (mortgage, taxes, insurance). Don’t forget to take other expenses into consideration beyond the monthly mortgage payment, such as closing and moving costs, utilities and maintenance. Next, figure out how much you can afford for your down payment, which should be about 20% of the total cost of the home. Find out your credit score, and if it’s low, make a plan to improve it. Your credit score is a crucial factor that determines the interest rate on your mortgage.
2. Get pre-approved. Even before you start looking, you must be pre-approved for a mortgage loan. This will tell you how much the bank is willing to loan you. Stick with the number you originally budget for, even if the number you are pre-approved for is larger. Only you know how much house you can afford. Pre-approval is transferrable between Maryland, D.C., and Virginia and is totally free. You can fill out an online form or visit a bank, credit union, or a mortgage lender.
3. Choose your lender & realtor carefully. You will need to find a quality, hardworking, and above all reputable agent to help you find a home. Get referrals from friends and family and interview more than one person. Buying a home is one of the largest financial decisions you’ll make; you need to be able to trust the people you are working with.
4. A few other takeaways:
- Spring is peak purchase season, so try to shop during mid-summer or late fall.
- Make a list of priorities your new home needs to have such as Metro access, parking, outdoor space, etc.
- Renovations on a “fixer-upper” are often more expensive than you anticipate. If you’re a first time home-buyer, consider buying a home that is move-in ready.
Buying a home isn’t a decision to make lightly, but with diligence and proper planning, it’s within reach. By making use of these tips, you’ll at least start off on the right foot. All in all, do your research and don’t be afraid to ask questions. It will be much easier to have conversations with realtors and lenders when you understand the basics.
Planning for the future felt overwhelming, but this workshop made me realize that I am not alone, and there are other women out there who share the same concerns and dream of one day owning a home. Stay tuned for upcoming events in the financial empowerment workshop series hosted by the Young Women’s Leadership Network, where we will explore investing and saving.