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5 Things I Wish I Knew Before Buying My First Home That Can Save You Money
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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This Black Woman-Owned Creative Agency Shows Us The Art Of Rebranding
Rebranding is an intricate process and very important to the success of businesses that want to change. However, before a business owner makes this decision, they should determine whether it's a rebrand or an evolution.
That's where people like Lola Adewuya come in. Lola is the founder and CEO of The Brand Doula, a brand development studio with a multidisciplinary approach to branding, social media, marketing, and design.
While an evolution is a natural progression that happens as businesses grow, a rebrand is a total change. Lola tells xoNecole, "A total rebrand is necessary when a business’s current reputation/what it’s known for is at odds with the business’s vision or direction.
"For example, if you’ve fundamentally changed what your product is and does, it’s likely that your brand is out of alignment with the business. Or, if you find your company is developing a reputation that doesn’t serve it, it might be time to pump the brakes and figure out what needs to change.
She continues, "Sometimes you’ll see companies (especially startups) announce a name change that comes with updated messaging, visuals, etc. That usually means their vision has changed or expanded, and their previous branding was too narrow/couldn’t encompass everything they planned to do."
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The Brand Doula was born in 2019, and its focus is on putting "the experiences, goals, and needs of women of color founders first," as well as brands with "culture-shifting missions."
According to Lola, culture-shifting is "the act of influencing dominant behavior, beliefs, or experiences in a community or group (ideally, for the better)."
"At The Brand Doula, we work with companies and leaders that set out to challenge the status quo in their industries and communities. They’re here to make an impact that sends ripples across the market," she says.
"We help the problem solvers of the world — the ones who aren't satisfied with 'this is how it's always been' and instead ask 'how could this be better?' Our clients build for impact, reimagining tools, systems, and ways of living to move cultures forward."
The Brand Doula has worked with many brands, including Too Collective, to assist with their collaboration with Selena Gomez's Rare Beauty and Balanced Black Girl for a "refresh," aka rebrand. For businesses looking to rebrand, Lola shares four essential steps.
1. Do an audit of your current brand experience — what’s still relevant and what needs to change? Reflect on why you’re doing the rebrand in the first place and what success would look like after relaunching.
2. Tackle the overall strategy first — before you start redesigning logos and websites, align on a new vision for your brand. How do you want your company to be positioned moving forward? Has your audience changed at all? Will your company have a fresh personality and voice?
3. Bring your audience along the journey — there’s no need to move in secret. Inviting your current audience into the journey can actually help them feel more connected to and invested in your story, enough to stick around as changes are being made.
4. Keep business moving — one of my biggest pet peeves is when companies take down their websites as soon as they have the idea to rebrand, then have a Coming Soon page up for months! You lose a lot of momentum and interest by doing that. If you’re still in business and generating income, continue to operate while you work on your rebrand behind the scenes. You don’t want to cut existing customers off out of the blue, and you also don’t want so much downtime that folks forget your business exists or start looking for other solutions.
While determining whether the rebrand was successful may take a few months, Lola says a clear sign that it is unsuccessful is negative feedback from your target audience. "Customers are typically more vocal about what they don’t like more than what they do like," she says.
But some good signs to look out for are improvements in engagement with your marketing, positive reviews, press and increase in retention, and overall feeling aligned with the new branding.
For more information about Lola and The Brand Doula, visit her website, thebranddoula.com.
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Beyoncé Doubles Down On Not Releasing Visuals For 'Renaissance' Or 'Cowboy Carter': 'The Music Is Enough'
While many people are still unpacking the CMAs shutting out Beyoncé'sCowboy Carteralbum, her cover story for GQ's October issue is now taking center stage. Beyoncé is shown rocking the big hair we've come to love in her country era, giving us queen realness as always.
In the interview, the multifaceted singer spoke about the two albums in the trilogy, Renaissance and Cowboy Carter, as well as her family. She also opened up about her exciting business ventures, such as her haircare brand Cécred and the launch of her whiskey, SirDavis, and why it's crucial for her to be more than just the face of her brands.
"There’s a huge contrast between the business journeys of men and women. Men often have the luxury of being perceived as the strategists, the brains behind their ventures. They’re given the space to focus on the product, the team, the business plan. Women, on the other hand, especially those in the limelight, are frequently pigeonholed into being the face of the brand or the marketing tool. It’s important to me to continue to take the same approach I have taken with my music and apply my learnings to my businesses," she said.
"I am here to change that old narrative. I’m here to focus on the quality. We took our time, and we did our research, and we have earned respect for our brand. I try to choose integrity over shortcuts. I’ve learned that true success isn’t about leaning on a name; it’s about crafting something genuine, something that can hold its own. It’s not about being perfect. It’s about being revolutionary."
I know that's right Bey! Check out the highlights below:
On her daughter Blue Ivy being a creative.
I build my work schedule around my family. I try to only tour when my kids are out of school. I always dreamt of a life where I could see the world with my family and expose them to different languages, architecture, and lifestyles.
Raising three kids isn’t easy. The older they get, the more they become their own individuals with unique needs, hobbies, and social lives. My twins are God-sent. Parenting constantly teaches you about yourself. It takes a lot of prayer and patience. I love it. It’s grounding and fulfilling.
My kids come with me everywhere I go. They come to my office after school, and they are in the studio with me. They are in dance rehearsals. It’s natural that they would learn my choreography.
Blue is an artist. She has great taste in music and fashion. She is a fantastic editor, painter, and actress. She has been creating characters since she was three. She’s a natural, but I did not want Blue onstage. Blue wanted it for herself. She took it seriously and she earned it. And most importantly, she had fun! We all watched her grow more and more every night before our eyes.
On her decision to not provide visuals for "Renaissance" and "Cowboy Carter" albums.
I thought it was important that during a time where all we see is visuals, that the world can focus on the voice. The music is so rich in history and instrumentation. It takes months to digest, research, and understand. The music needed space to breathe on its own. Sometimes a visual can be a distraction from the quality of the voice and the music. The years of hard work and detail put into an album that takes over four years! The music is enough. The fans from all over the world became the visual. We all got the visual on tour. We then got more visuals from my film.
On being proud of the work she put into "Cowboy Carter."
I am proud of what I have been able to do, but I also recognize the sacrifices—mine and my family’s. There was a time when I was pushing myself to meet unrealistic deadlines, while not taking the time to enjoy the benefits of why I was working so hard. There aren’t many of us from the late ’90s who were taught to focus on mental health. Back then, I had little boundaries, and said yes to everything. But I’ve paid my dues a hundred times over. I have worked harder than anyone I know. And now I work smarter. In the end, the biggest reward is personal joy. Has what I created pushed others to think freely and believe in the impossible? If the answer to that question is yes, then that is the gift.
On legacy being her biggest motivator in business.
I get excited about love, legacy, and longevity. Do I love what I am trying to create for the love of it? I am discovering that legacy is the common denominator in all the businesses that I have done.
On protecting her family and her peace.
We live in a world of access. We have access to so much information—some facts, and some complete bullshit disguised as truth. Our children can FaceTime and see their friends at any given moment. My husband and I? We used calling cards and Skype when we were falling in love. I couldn’t afford the international hotel bills, so I literally would get international calling cards to call him. Just recently, I heard an AI song that sounded so much like me it scared me. It’s impossible to truly know what’s real and what’s not.
One thing I’ve worked extremely hard on is making sure my kids can have as much normalcy and privacy as possible, ensuring my personal life isn’t turned into a brand. It’s very easy for celebrities to turn our lives into performance art. I have made an extreme effort to stay true to my boundaries and protect myself and my family. No amount of money is worth my peace.
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