Welcome to another edition of the Young Adult’s Perspective series, where we help newly financially independent young adults make sense of the journey that comes with being on your own. This week, we’ll be taking on one of the biggest challenges in establishing independence: purchasing your own home. Unlike previous topics, I don’t have any sense of what it means to be a homeowner, or even to search for a home. That’s why I reached out to Greg Smalls, Director of Housing Development at CESI, to get some advice on how to make homeownership accomplishable for those starting out. Smalls has been working with CESI since 2002, and serves as the head of the HUD approved Homeownership Center at CESI.
How did you get
interested in working in housing counseling, and what led you to CESI?
Smalls: I experienced a period of homelessness in 1977. During that time, when I visited houses with my family, the feeling was similar to going to a big sporting event. Ever since I got out of that situation, I’ve been interested in working in home buying and ownership. I started working for CESI as a credit counselor, but in 2016 I transitioned over to the Homeownership Center. I have a passion for helping people and sharing knowledge, so having the opportunity to assist people trying to achieve the American Dream of homeownership has been my mission ever since.
What do you feel is the
most important factor in deciding between a house and an apartment?
The most important thing to consider, whether you are searching for a home as an individual or as a group, is “What are the needs and what are the wants?” People need to establish what the most important thing they want in a home is and find somewhere that will offer it. This can be a number of things, such as a large backyard, a modern kitchen, being near a good school, etc. Whatever that one central need is, don’t deviate from it. In saying that, it’s important to also express that you may be needing to compromise. The first home you buy may not necessarily be your perfect dream home, even with that need met.
When during the year do
you tend to be the busiest with counseling? Is that common for housing
counselors to be so busy that time of year?
Spring tends to be the busiest time of year, both for us and for the counseling industry. People like to hold onto homes in the winter, ideally preparing them to sell as they look for a new place to live. Most couples and families try to sell in the May to July period, so it won’t affect their kid’s schooling.
What are some
misconceptions people have with the home buying process?
A lot of people don’t have the faith that they will be
successfully able to navigate the waters that lead to homeownership. There are
a lot of moving parts, but the process is more doable than people will believe.
Regarding finances, most home buyers are unaware of down-payment assistance
programs, which if they knew about would restore a lot of that faith. Getting
Pre-Approved is certainly important, not just for the buyers, but for the
agents in order to know the price points of the homes that a potential homeowner
can look for. A solid budget should be in place before home shopping as well. There’s
no reason to look at a house that’s twice your budget, as it will only
disappoint you and make the searching process more difficult. In addition to
money, it’s a good idea to discuss elements like the type of home and the
locations right at the start of the process to avoid confusion. Why look at a
house without a first-floor master if you have bad knees? Why move into the
suburbs if you work deep in a city?
Another piece of advice to simplify the process is to attend a home buyer’s workshop. These workshops are vital because they will teach buyers what they need to know for every phase of homeownership, beyond when they are just looking for and buying a home. You should also build a team to work through the process, and that team should include a realtor, a lender, an attorney and a home inspector. The more spread out and knowledgeable the team is, the easier the process is, especially once you purchase a home. Once all of that is considered and applied, then people can go out and look for homes. As a part of the process, you should definitely go visit a potential home in person, and not just view it online. The location, weather, noise, traffic: all of these can’t be experienced the same way by just reading a screen. Remember also that you’re not just buying your house, you’re buying the whole neighborhood. Better to know beforehand if you will have issues with a neighbor than to move in and have constant problems.
What are some of the
problems you deal with most frequently for people trying to buy their first
house or apartment?
loans are one of the biggest problems for first-time home buyers. If you
have $200,000 in loan debt, but only bring in $30,000 a year in income, it can
be difficult to get a home loan. Even if the student loans are in deferment, your
lender could have to count your student loan debt as if you were making
payments, which can cause you to be disqualified for a home loan.
Do you have any
particular advice for people who are just out of college and looking for their
You want to be able to visualize being able to sell or rent the home when you buy it. For people fresh out of college, their first house or apartment will likely not be their last. There are plenty of reasons why you might suddenly need to move. It’s important to consider as far as 10 years down the road whether your home will be in a good, sellable condition. If it sells well, the transition into your next home will be easier, especially on your finances. So do your best to keep your home looking and feeling like new.
Consumer Education Services, Inc. (CESI) is a non-profit committed to empowering and inspiring consumers nationwide to make wise financial decisions and live debt free. Speak with a certified counselor for a free debt analysis today.