The Bibel Team: How to Prepare to Buy a Home

Eric: Hey everyone. Eric Bibel with the Bibel team at NEO Home Loans, and today I’m here to talk to you about what you can be doing today, this very day, to prepare for home ownership.

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If you like the content that you’re seeing here, please like, subscribe, comment, share. This helps us continue to push this content out at a global level. So, we continue to get a lot of questions from our potential clients on a daily basis. “I May not be ready this very minute, but what can I be doing today to ensure that I’m positioned to buy when that time comes?” So, great question. There are a ton of useful takeaways that we can look at and help you prepare yourself to become a homeowner.

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Something that we’re monitoring and watching very closely has been rents. Rents have continued to be a very hot topic. And why I bring it up is that rents have continued to rise exponentially over the last year. And really if you go back years before then, it’s it’s been the same. And if we look at some of the recent data that’s just come out since January of 2021, we have seen an 11.4% rent increase nationally.

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Why I bring that up and why it’s pertinent to this conversation? 11.4% increase in rent. You’re essentially in a variable rate mortgage, meaning your payment can adjust if you’re in a month to month scenario, month over month. And it puts a tremendous amount of fear in prospective clients or any client for that matter. And really the one biggest takeaway from that is, if my rent’s rising and my income is fixed, how can I prepare or save for a down payment? Well, the good news is there are ways that you can combat that. And really what I advocate and share with all my clients is, start saving.

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We all have an emergency fund or preparing for an emergency fund. But one of the biggest things that I like to share with my clients is, even in a raising-rent environment, whatever you can save today, create a separate what I would call a sinking fund. So, an additional savings account where you put money into it, and time it with your paychecks. And that can be any amount, whether it’s $20, $50, $100. Maybe don’t go to Starbucks as many times, maybe don’t eat out as much. But whatever you can put away. And it has to be a separate account, can not be in the same account because as individuals, if it’s in one fund, if it’s there, we’re going to spend it. I know, I’m a victim of it as well. But if you create a separate fund now where you do auto transfers, when you see an inflow of funds and it automatically goes to that separate account, that now creates a baseline for your potential home down payment, down the road. That’s one aspect.

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The second aspect that I like to advocate for is really assessing your finances and working on your credit. And what does that mean? Assessing your finances means really looking at what you’re spending, on what, and when. And understanding, where can I potentially make adjustments? So, as I said in creating that separate fund about cutting back the number of times that you go to Starbucks or eat out, you know, there’s that $6 cup of coffee that you grab every morning where you can grab a can of beans at home for $10 and make coffee for the month. I know I love Starbucks. I’m a huge advocate for Starbucks, but you know, $6 every day, sometimes multiple times throughout the day, that adds up. And if you take that money and put it back into that sinking fund account, then before you know it your funds start to grow, and continue to grow. So that’s one thing to definitely look at; assessing where your spending habits are and putting through plans where you can now channel those funds into savings.

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Another piece is looking at your credit. And really, this is where connecting with a trusted advisor to help guide through the credit process can help. I’ve been there. I personally remember a time right in college, I opened up a credit card and made some poor choices, which really dragged my score down. And it was because I did not have access to information or knowledge around credit. So, you know, with getting the access down road by speaking to a trusted advisor, I was able to ultimately rebuild my credit which put me in a position to buy a house for my family. I advocate the same for you. You should not feel shameful about your credit. Credit is such a quintessential piece to your financial health, and there’s so much misinformation out in market where if you’re not taking the necessary steps to ensure that you’re financially positioned, you’re doing a disservice to yourself.

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There is financial literacy, credit literacy, there’s so much information that my team and I would love to help work through. And that really having those pieces together, we find that one in four credit reports have some form of inaccuracy or just some misinformation. You think, well if I do this, if I close this account, it’s going to help my credit score. But having a firm understanding today can really set the tone for 6 months, 12 months, 24 months down the road. The actions you do today can really position you downwind. That dovetails into starting the conversation early with a trusted advisor. So if you’re in the idea or mindset that you want to be a homeowner at some point, whether it be today or downwind, starting the conversation early can put you in a significantly better position than not. And here, our advocation is to create sustainable home ownership.

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I’ve had clients that I’ve been working with for three, four or five years that are still creating a plan to get into a home. And here, we could give information around how to create a savings fund. We can help go through your budget to understand where money can be reallocated. The credit piece. Credit, again, is such a quintessential piece to our financial health. And not having the correct information can put you in a position where you’re unable to act when you feel it’s time to act. So really setting aside the time, identifying somebody that you connect with that’s a trusted advisor. One piece of information to take away from today, if you don’t listen to anything else, start the conversation early. Your future self will thank you.

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Ultimately, the bottom line of all this is that the opportunity to become a homeowner is there for everyone. It may not be the right answer for everyone, but the opportunity is there. And if you start the conversation early, there are specific techniques, steps, processes that we can assist with going through that will position you to be able to achieve that dream. My team, and I would love the opportunity to assist. Please reach out to us today.

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