Can you imagine achieving and living your dream through real estate ownership and investing? Building a passive income stream that pays all your expenses so that you can pull up your drawbridge while living in comfort to define your vision of full happiness and planning how you will achieve exactly that. You may not begin with your Dream Home but you can fulfill your Dream of Owning a Home.
According to the 2017 Hearth State of the American Dream report, the majority of American’s still firmly believe homeownership is a fundamental piece of the American Dream - “all generations –including millennials– agree homeownership is very important to achieving the American Dream.” The survey found “owning a home I love” more important than “starting a family” or “finding a fulfilling career”.
Other highly held beliefs of homeowners are that it is key to building wealth and an achievement of hard work. Most of today’s senior generation sees homeownership as the cornerstone of their legacy that will pass wealth to children and family. The report concluded:
“This survey revealed a powerful finding: Across demographic groups, homeownership remains a precondition of the American Dream.”
Your dream home or your dream of a home? Achieve what you can today and build on it for tomorrow. Fulfilling your dream of homeownership begins with a plan and a process. Don’t allow prices in the hundreds of thousands to intimidate you. The proven process gives you 30 years to pay it off. Although there are many ways of completing the purchase much sooner, you probably need to begin with the basics. Once you have that first mortgage approved and signed, you instantly have owner equity and financial clout. You will have a big leg up towards obtaining your ultimate dreams.
The down payment is the biggest obstacle most first time buyers face. It’s highly unlikely you’ll need the full 20 percent down payment nut. First-time homebuyer programs are plentiful, including federal mortgage programs with Fannie Mae and Freddie Mac that allow loans with only 3 percent down. There are many other programs available as well. Some of these don’t require any money down and others target people willing to put a little sweat equity into a fixer. Talk to a mortgage or real estate broker about programs you likely qualify for.
You don’t have to be forever locked into the first house you buy but you should give thought about your future when deciding what is right for you today. Your future plans will financially benefit from mortgage decisions you make today. If your plans are for another home within seven years, you don’t want to buy down the interest rate by paying points upfront. On the other hand, if you will be in that first home more than seven years, doing the math shows you the financial gains to be made buying down the interest rate (use online calculators).
The same consideration should be given to the length of mortgage you take out. The 30-year mortgage is the standard for most first time buyers. However, a 15 or 20-year loan may be a better option supporting your particular future dreams. Even a 30-year mortgage can be paid off sooner and at a pace meeting your financial capability at any given time. Work bonuses, commissions, inheritances, monetary gifts, and any other financial windfall can always be applied towards paying down your mortgage much earlier.
When looking towards your future, finding the right neighborhood is just as important as locating the right house. Research the schools, regardless if you’re planning for kids because schools affect a home’s value. Look up the local safety and crime statistics or ask your real estate broker to show them to you. Check out the services of the nearest hospital, pharmacy, grocery store, and other amenities you’ll use. Be sure to drive and walk through the neighborhood on various days and at different times to check out traffic, noise, and neighborhood activity levels.
Within the home, focus on the important features like furnaces and roofs while keeping superficial details like paint color, fixtures, and carpets in a distant perspective. Superficial features are easy to change once the home is yours. Don’t let these little details drive your purchase decision.
The purchase negotiation can result in major savings for you. Are there any major repairs you can ask the seller to take care of? Either before the sale or by giving you a credit at closing? Negotiate for the seller to pay some of the closing costs. Your real estate agent will help you with negotiations but establish and stick to a specific target price below your preapproval that you’re willing to pay to fulfill your dream of owning a home. Don’t limit your future dreams by over spending today. If there are multiple bids, think about tactics to win over the seller, such as a personalized letter.
“Owning a home is a keystone of wealth—both financial affluence and emotional security.”
- Suze Orman from Twelve Steps to Wealth
Please leave a comment about your thoughts of the American Dream.
About the author: Brian Kline has been investing in real estate for more than 35 years and writing about real estate investing for nine years. He also draws upon 35 plus years of business experience. Brian currently lives at Lake Cushman, Washington. A vacation destination in the Olympic Mountains with the Pacific Ocean only a few miles in the opposite direction.