I was speaking with a friend the other day who is paying almost 900.00 a month for a 400 sq ft apartment.Â She was complaining that she was having trouble reaching her landlord about a plumbing issue she was having.Â She
was willing to foot the bill for the necessary repair, but she couldnâ€™t
find a plumber who would do the work without the permission from the
landlord.Â Why the landlord wouldnâ€™t return her calls is a mystery to her.Â Why she would continue to try to reach him is a mystery to me.
I asked her about
her apartment complex and she went on to complain about the neighbors,
the neighbors kids, the parking situation, the disastrous laundry room
issues, the lack of lawn care and yard space and finally about how her
rent had gone up twice in the past year!
After listening to her for a few minutes, I asked her why she stays there if she is so unhappy.Â She said that she couldnâ€™t afford to move.Â Ok, I expected that answer but I asked again why do you continue to live somewhere that doesnâ€™t feel like â€œyourâ€ home?Â She was puzzled and asked me what I was getting at.Â I said â€œwhy donâ€™t you buy a house?â€Â She laughed and went on to tell me that sheâ€™d never be able to afford a home.Â Then I laughed and said â€œhave you received that opinion from a professionalâ€?
I went on to
explain that if she could afford 900.00 dollars a month for rent, then
wouldnâ€™t it make sense to spend that 900.00 on a home that was hers?Â She said â€œof course it would, but I donâ€™t have twenty thousand dollars for a down paymentâ€.Â Now it was my turn to laugh and I asked her where she got the impression that she needed that much money to buy a home.
As it turns out, my
friend has been tricked into thinking that the only way to buy a home
is to have â€œperfectâ€ credit, a 20% down payment and an income of more
than $50,000.Â Unfortunately, my friend is not
the only apartment dweller who believes in these misconceptions and
therefore continues to live in a place where she has little or no
control over the space that she pays for handsomely with her hard
earned money on a monthly basis.
It makes me feel so
sad to think about how many potential buyers are spending their hard
earned paychecks building equity for their landlords when they could be
spending the same and in some cases even less in owning their own home
and building their own equity.
So let me take this time to dispel some of the buyerâ€™s myths that I have encountered recently in my local marketâ€¦
First, there is a definite difference between â€œperfectâ€ credit and â€œgoodâ€ credit.Â When I hear people say â€œI canâ€™t buy a house my credit isnâ€™t good enoughâ€ I ask them â€œwho told you that?â€Â The answer is always the sameâ€¦â€well, no oneâ€ or â€œI heard it on the newsâ€.Â No one has ever told them that their credit isnâ€™t good enough because they have never taken the time to ask.Â Why wonâ€™t they ask?Â What are they afraid of?Â They
love the idea of owning their own home but they shoot themselves in the
foot when they wonâ€™t search out a mortgage professional and ask the
simple question of â€œcan I qualify to buy a home?â€
Second, I often hearâ€¦â€I canâ€™t afford a mortgageâ€.Â Again I ask, â€who told you that?â€Â Again I get the answer, â€œwell, no oneâ€ or â€œI heard it on the newsâ€Â Â When
I learn that they are paying 900.00 or more for rent I ask if they are
able to pay their rent on time and the answer is always a resounding
â€œyesâ€.Â Then I ask them how much they think a
mortgage payment would be and then they hem and haw and shuffle their
feet and finally tell me â€œI donâ€™t knowâ€.Â It takes everything I have not to just shake my head and sigh.Â How on earth can you be so sure that you canâ€™t afford a mortgage if you donâ€™t have any clue how much a mortgage is?Â Again,
they shoot themselves in the foot when they wonâ€™t search out a
professional or even get online and find a mortgage calculator to get a
basic idea of how much of what they are already affording could be
better used towards owning their own home.
The third thing I
hear the most when I ask someone why they continue to pay rent instead
of buying their own home is â€œI donâ€™t have the 20% down paymentâ€.Â I canâ€™t stop myself from laughing when they say this and my answer is always the same, â€œneither can I.â€Â Then I go into the same statements Iâ€™ve already made.Â I
ask who told them they needed that large a down payment and the answer
this time is the same as before, â€œwell, no oneâ€ or â€œI heard it on the
Ok, so for those of
you reading this who are continuing to pour your hard earned money into
someone elseâ€™s pocket for the purpose of building someone elseâ€™s
equity, here are a few things you need to knowâ€¦
One, you donâ€™t need $20,000 to buy a $100,000 home.Â The
FHA (Federal Housing Administration) lending program only requires a
down payment of 3.5%....in other words $35.00 for every THOUSAND you
intend to borrow.Â This is not a misprint!Â If you want to buy a 100,000 dollar home, you only need $3500 for a down payment!Â Thatâ€™s not much more than the first, last and security deposit that most people pay to get an apartment in the first place.
Two, at todayâ€™s
mortgage rates at around 5 percent you can roughly figure a mortgage
payment of principal and interest would be just over 500.00 per month.Â Of
course you have to add property tax and insurance to that figure, but
itâ€™s pretty safe to say that on a 100,000 dollar mortgage your payments
would be not much more than your cost of rent and in many cases could
Third and finally,
yes, credit is an issue, but if you havenâ€™t spoken with a professional
who understands the intricacies of credit scores and how they are
viewed by mortgage companies then you really donâ€™t know if you can
qualify or not.Â So why not ask the question?Â Contact
your local bank or Real Estate professional, ask them to refer you to a
mortgage specialist for the purpose of a â€œpre-qualificationâ€.Â It
costs nothing to learn the truth about your ability to obtain a
mortgage and there are no obligations to anyone for asking the question
â€œdo I qualifyâ€ so why not do it?
I hope this information is helpful to you.Â If not for your, then maybe for someone you know.Â The bottom line is thisâ€¦you are not stuck where you are unless you allow yourself to be.Â A
few good questions, directed at the proper professionals who can give
you quality answers and you could be living the American dream of home
Go ahead, I dare youâ€¦ask me the questions and if I canâ€™t answer them I can direct you to someone who can!
Have a great day!
Julianne Krutkaemail:Â Julianne.Krutka@gmail.com