Written by: Lisa Karel
Getting your foot on the property ladder is almost always a stretch financially for first-time home buyers, but the experience of Nancy A and her partner, George T in Huntington Park, CA, shows that it’s possible, even on a limited income. While interest rate hikes have put a damper on home buying activity in the short-term, now is a good time to build up your savings and get familiar with the process so you can be ready to put in an offer on a home when the right time comes. Here are a few key steps Nancy and George took so they could start building generational wealth through real
estate.
Be flexible – and realistic – on location and timing. Nancy and George concentrated their home search in Los Angeles, but just couldn’t make the numbers add up based on their income. A serendipitous meeting with a realtor at an Open House opened them up to the possibilities of Huntington Park, a city nearby, with many more houses for sale that fit their budget. It also helped that they weren’t in a rush and could take the time to explore the market.
“Know what you don’t know” when it comes to the home buying process. FHA vs. conventional loans. First time homebuyer loans and grants. APR. There’s a lot of jargon to decipher and that’s why it’s essential to have an expert by your side. On that front, Nancy and George leaned on the experience and knowledge of Operation HOPE Financial Wellbeing Coach, Emily Grajeda. Emily guided the couple through Operation HOPE’s homeownership education sessions so they could learn all about the loans and grants available to first time home buyers. Through Operation HOPE, Nancy and George were then connected to a loan officer at Boston Private (now Silicon Valley Bank), who helped them secure a mortgage on terms they could afford. The loan officer and Emily also urged the couple to apply for the WISH Grant. They were pleasantly surprised to receive down payment assistance through this program, which is available to low- to moderate-income earners.
It’s never too early to start saving for your down payment. Nancy encourages others to reach for the goal of homeownership, but cautions that it takes sacrifice. “While there’s a lot of
assistance for first time home buyers, you do need to do your part and commit to saving for a down payment and other closing expenses.” For the couple, that meant forgoing vacations and
limiting restaurant visits for three years as they saved for a house deposit. “At first we didn’t think it would be feasible to buy the home but with the assistance we received through
Operation HOPE and the resources our loan officer connected us with, we were able to actually get the home with the funds we had saved.”
Homeownership aids financial stability now—and wealth generation over the long run. Nancy is grateful for the financial stability that homeownership brings. “It’s a relief that I know exactly what my housing costs will be so I have the wiggle room to take on other loans and still maintain a reasonable debt to income ratio,” she said. Nancy is also optimistic that real estate can help her build wealth for the future; the couple is exploring options to build a small housing unit on the back of the property and eventually keep their first home as a rent-producing investment property when they’re ready to upgrade to a larger home.
“Be fully committed to taking the time to learn about the homeownership process, which is made easier with Operation HOPE by your side,” she said.