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FIRST HOMEA Guide To Buying YourJennifer RodgersBroker / OwnerGreen Key Real EstateJackson, MIjenniferrodgers@greenkeysellsmi.comwww.greenkeysellsmi.com(517)-398-2541

Table of Contents3 Top Reasons To Own Your Home4 How To Kick Off the Homebuying Process6 Myth 1: My Student Loan Debt Means IWon’t Qualify8 Myth 2: I Need To Have a 20% Down Payment10 Myth 3: Renting Makes More Financial Sense13 Key Terms To Know When Buying aHome14 Your Journey to Homeownership15 Why Pre-Approval Matters17 Things to Avoid After Applying for a Mortgage19 Be Realistic About Your Desired Features20 Checklist To Determine Your Must-Haves21 Keys to Success for First-TimeHomebuyers22 How a Professional Supports YourHomeownership Goals

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Buying a house can feel like a daunting task. It involves a lot of different factors,including everything from loan qualification and credit checks to appraisals, legalcontracts, and more. It can all feel a little unapproachable, especially if you’venever done it before. But it doesn’t have to be that way.How To Kick Offthe Homebuying Process4Acknowledge This Once-in-a-Lifetime AchievementAs you take the first steps on this journey, focus on the excitement you feel. Homeownershipchanges lives – it’s that simple. It gives you more stability, more stake in the community, and agreater sense of pride and accomplishment. Don’t worry – no one expects you to know everything about the process up front. Instead, focuson your homebuying goal and how achieving it will change your life. Let the experts help youalong the way with the finer details. Your job is to think about what you want, what you need,and who’s going to help you achieve your goal.Build Your Knowledge and Your TeamWhen it comes to buying your first home, seeking out information about homeownership and thehomebuying process is the first step. Before you can make one of the biggest and mostimpactful purchases of your life, you need to understand what it takes to become a homeownerand why homeownership is so worthwhile. That’s where the experts come in. In this guide, you’ll find expert insights and research to help you learn how to get started, whatyou need to know, and what you can expect from the process. That way, you’ll have confidenceas you take this important step forward.

5Bottom LineIf you’re thinking abouthomeownership, make sure youhave the information you need tomake your decision. Let’s start bybreaking down the top three mythsthat could be holding you back. Student Loan Debt Down Payments Beliefs on Renting vs. BuyingYou’ll find out what’s true and what’snot. That way, if you’re on the fenceabout whetheryou want to buy, oryou’re just kicking off your journey intohomeownership, you’ll have theinformation you need to make aninformed decision. Understand the Key Pieces of the PuzzleAnother thing to remember is that youmay also need to overcome some of the hurdles that you feel are holding you back. Any time you make a big life decision,it’s human nature to have concerns orlook for reasons you’re not ready. In therest of this guide, you’ll explore some ofthe main things that could be holding youback, including:

6If you have student loans and are looking to buy a home, you may bewondering how that debt could impact your plans. Do you have to wait untilyou’ve paid off your loans? Or could you qualify for a home loan with that debt?To give you the answers you’re searching for, let’s take a look at what recentdata shows. 47%say their student loans make it harder to save for adown payment45%say they think they can’t qualify for ahome loanbecause of existing debt43%say they believe the delay is necessary even though they’ve neverappliedfor a mortgageNo matter which reason resonates most with you, you should know a delay may not benecessary. While everyone’s situation is unique, your goal may be more within your reachthan you realize. Do You Have To Delay Your Plans Because of Student Loans?If you’re worried your student loan debt means you have to put yourhomeownership goalsonhold, you’re not alone. In fact, manyfirst-time buyersin this situation believe they have to delaytheir plans. According todatafrom theNational Association of Realtors(NAR):“When asked specifically about purchasing a home,half of nonhomeowners say student loandebt is delaying them from purchasing a home(51%).”When asked why their student loans are putting their plans on the back burner, three keythemes emerge:Myth 1: My Student Debt Means I Won’t Qualify

7Can You Qualify for a Home Loan if You Have Student Loans?In the same report from NAR, data shows many current homeowners have student loan debtthemselves:“Nearly one-quarter of all home buyers, and 37% of first-time buyers, had student debt,with a typical amount of $30,000.”That means other people in a similar situation were able to qualify for andbuy a homeeventhough they also had student loan debt. You may be able to do the same, especially if you have asteady source of income.Apartment Therapydrivesthis point home:“. . .buying a home with student loans is possible, experts say.The proof is in the numbers,too: Some 40 percent of first-time homebuyers have student loan debt, according to the NARstudy.”The key takeaway is, for many people, homeownership is achievable even withstudent loans.The best way to make a decision about your goals and next steps is to talk to the professionals. Areal estate advisor can walk you through your specific situation, your options, and what hasworked for other buyers like you. They can also connect you with other professionals, such as a trusted lender, who can help. Youdon’t have to figure this out on your own – lean on the experts so you have the information youneed to make the right decision for you.Bottom LineMany other buyers with student loan debt are already achieving their homeownershipdreams. Maybe it’s time to take the next step toward making yours a reality too. Let’sconnect to discuss your options and find out how close you are to achieving your goal.

8If you’re planning to buy your first home, then you’re probably focused on savingfor all the costs involved in such a big purchase. One of the expenses that maybe at the top of your mind is your down payment.A Common and Costly MisconceptionIf you’re intimidated by how much you need to save for your down payment, it may be becauseyou believe you must put 20% down. That doesn’t necessarily have to be the case. As theNational Association of Realtors (NAR) notes:“One of the biggest misconceptions among housing consumers is what the typical down paymentis and what amount is needed to enter homeownership.”And a recent Freddie Mac survey finds:“. . . nearly a third of prospective homebuyers think they need a down payment of 20% or more tobuy a home. This myth remains one of the largest perceived barriers to achievinghomeownership.”Here’s the good news. Unless specified by your loan type or lender, it’s typically notrequired to put 20% down. This means you could be closer to your homebuying dreamthan you realize.Myth 2: I Need To Havea 20% Down Payment

What Does This Mean for You?It means you may not need to save as much as you originally thought.And it’s not just how much you need for your down payment that isn’t clear. There are alsomisconceptions about down payment assistance programs. According to Down Payment Resource, there are over 2,000 homebuyer assistance programs inthe U.S., and the majority are intended to help with down payments. Plus, there are even loan types, like FHA loans with down payments as low as 3.5% as well asoptions like VA loans and USDA loans with no down payment requirements for qualified applicants.If you’re interested in learning more about down payment assistance programs, information isavailable through sites like Down Payment Resource. Then, partner with a trusted lender to learnwhat you qualify for on your homebuying journey.9Bottom LineRemember, a 20% down payment isn’t always required. If you want to purchase ahome this year, let’s connect to start the conversation about your homebuying goals.Median DownPaymentsToday’s mediandown paymentis far less than 20%Sources: NAR, FHA6%14%3.5%First-TimeHomebuyersAllHomebuyersWith SomeLoan OptionsAccording to NAR, the median down payment hasn’t been over 20% since 2005. In fact, themedian down payment for all homebuyers today is only 14%. And it’s even lower for first-timehomebuyers at just 6% (see graph below):

10You may have heard some people say it’s better to rent than buy a home rightnow. But, even today, there are lots of good reasons to become a homeowner.One of them is that owning a home is typically viewed as a good long-terminvestment that helps your net worth grow over time.Homeownership Builds Wealth Regardless of Income LevelYou may be surprised to learn homeowners across various income levels have a much higher networth than renters who make the same amount. Data from First American helps illustrate this point(see graph below):Myth 3: Renting Makes More FinancialSenseSource: First AmericanHomeowners Build Wealth Across IncomesNet Worth Is Greater for Homeowners in Each Income CategoryIncome LevelOwner Net WorthRenter Net WorthDifference $46 - $74K$191K$11K$180K$74 - $127K$261K$34K$227K$127 - $192K$433K$117K$316K> $192K$1.6M$705K$895K

11What makes wealth so much higher for homeowners? A recent article from Realtor.com says:“Homeownership has long been tied to building wealth—and for good reason. Instead of throwingrent money out the window each month, owning a home allows you to build home equity. Andover time, equity can turn your mortgage debt into a sizeable asset.”Basically, the wealth you accumulate when you own a home has a lot to do with equity. As ahomeowner, equity is built up as you pay down your loan and as home prices appreciate overtime. Mark Fleming, Chief Economist at First American, explains how this same benefit isn’t truefor renters in a recent podcast:“Renters as non-homeowners gain no wealth benefit as home prices rise. That wealth actuallyaccrues to the landlord.”Before you decide to sign another rental agreement, now is a good time to think about whether itwould be better for you to buy a home instead. The best way to figure out what makes sense foryou is to have a conversation with a real estate expert you trust. That professional can talk youthrough the benefits that come with owning to determine if that’s the right next step for you. Bottom LineIf you're not sure whether to keep renting or to buy a home, know that owning a home,no matter how much money you make, can help build your wealth. Let’s connect to getstarted on the path to homeownership.

12ESSENTIAL INFORMATIONNow that you’re excited about homeownership andwe’ve cleared the hurdles that could be holding youback, let’s get tactical. Here’s a look at several keyterms you’ll need to know and some essentialinformation on what to expect from the homebuyingprocess.

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15You may have heard it’s important to get pre-approved for a mortgage at thebeginning of the homebuying process, but what does that really mean, and whyis it so important? What Pre-Approval Does for YouTo understand why it’s such an important step, you need to know what pre-approval is.As part of the homebuying process, a lender looks at your finances to determine whatthey’d be willing to loan you. From there, your lender will give you a pre-approval letterto help you know how much money you can borrow. Freddie Mac explains it like this:“A pre-approval is an indication from your lender that they are willing to lend youa certain amount of money to buy your future home. . . . Keep in mind that the loanamount in the pre-approval letter is the lender’s maximum offer. Ultimately, you shouldonly borrow an amount you are comfortable repaying."Basically, pre-approval gives you critical information about the homebuying processthat’ll help you understand how much you may be able to borrow. Why does this helpyou, especially today? With higher mortgage rates and home prices impactingaffordability for many buyers right now, a solid understanding of your numbers is evenmore important so you can truly wrap your head around your options.Why Pre-Approval Matters

16Pre-Approval Helps Show Sellers You’re a Serious BuyerLet’s face it, there are more people looking to buy than there are homes available forsale and that imbalance is creating some competition among homebuyers. That meansyou could see yourself in a multiple-offer scenario when you make an offer on a home.But getting pre-approved for a mortgage can help you stand out from other hopefulbuyers.As an article from Wall Street Journal (WSJ) says:“If you plan to use a mortgage for your home purchase, preapproval should beamong the first steps in your search process. Not only can getting preapproved helpyou zero in on the right price range, but it can give you a leg up on other buyers, too.”Pre-approval shows the seller you’re a serious buyer that’s already undergone a creditand financial check, making it more likely that the sale will move forward withoutunexpected delays or financial issues.Bottom LineGetting pre-approved is an important first step when you’re buying a home. The moreprepared you are, the better chance you have of getting the home you want. Let’sconnect so you have the tools you need to purchase a home in today’s market.

17While it’s exciting to start thinking about moving in and decorating after you’veapplied for your mortgage, there are some key things to keep in mind before youclose. Here’s a list of things you may not realize you need to avoid after applyingfor your home loan.1. Don’t Deposit Large Sums of CashLenders need to source your money, and cash isn’t easily traceable.Before you deposit any amount of cash into your accounts, discuss theproper way to document your transactions with your loan officer.2. Don’t Make Any Large PurchasesIt’s not just home-related purchases that could disqualify you from yourloan. Any large purchases can be red flags for lenders. People with newdebt have higher debt-to-income ratios (how much debt you havecompared to your monthly income). Since higher ratios make for riskierloans, borrowers may no longer qualify for their mortgage. Resist thetemptation to make any large purchases, even for furniture or appliances.3. Don’t Cosign Loans for AnyoneWhen you cosign for a loan, you’re making yourself accountable for thatloan’s success and repayment. With that obligation comes higher debt-to-income ratios as well. Even if you promise you won’t be the one makingthe payments, your lender will have to count the payments against you.Things To Avoid After Applyingfor a Mortgage

184. Don’t Switch Bank AccountsLenders need to source and track your assets. That task is mucheasier when there’s consistency among your accounts. Before youtransfer any money, speak with your loan officer.5. Don’t Apply for New CreditIt doesn’t matter whether it’s a new credit card or a new car, when youhave your credit report run by organizations in multiple financialchannels (mortgage, credit card, auto, etc.), it will have an impact onyour FICO® score. Lower credit scores can determine your interestrate and possibly even your eligibility for approval.6. Don’t Close Any AccountsMany buyers believe having less available credit makes them lessrisky and more likely to be approved. This isn’t true. A majorcomponent of your score is your length and depth of credit history (asopposed to just your payment history) and your total usage of credit asa percentage of available credit. Closing accounts has a negativeimpact on both of those aspects of your score.7. Do Discuss Changes with Your LenderBe upfront about any changes that occur or you’re expecting to occurwhen talking with your lender. Blips in income, assets or credit shouldbe reviewed and executed in a way that ensures your home loan canstill be approved. If your job or employment status has changedrecently, share that with your lender as well. Ultimately, it’s best to fullydisclose and discuss your intentions with your loan officer before youdo anything financial in nature.Bottom LineYou want your home purchase to go as smoothly as possible. Remember, before youmake any large purchases, move your money around, or make major life changes, besure to consult your lender – someone who’s qualified to explain how your financialdecisions may impact your home loan.

Must-Haves – If a house doesn’t have these features, it won’t work for you and yourlifestyle (examples: number of bedrooms/bathrooms, distance from work or loved ones, etc.).Nice-To-Haves – These are features you’d love to have but can live without. Nice-to-haves aren’t dealbreakers, but if you find a home that hits all the must-haves and someof these, it’s a contender (examples: a home office, a garage, etc.).Dream State– This is where you can really think big. Again, these aren’t features you’llneed, but if you find a home in your budget that has all the must-haves, most of the nice-to-haves, and any of these, it’s a clear winner (examples: a pool, multiple walk-inclosets, etc.).Once you’ve categorized it in a way that works for you, discuss your top priorities withyour real estate agent. Remember to think carefully about what’s a non-negotiable foryour lifestyle and what’s a nice-to-have that’s more of an added bonus. Be sure todiscuss where each feature falls with your agent. They’ll be able to help you refine thelist further, coach you through the best way to stick to it, and find a home in your areathat meets your top needs.Take some time to consider what’s truly essential for you in your first house. Make a list of all thefeatures you’ll want to see, and from there, work to break those features into categories. Here’sa great way to organize your list:Bottom LinePutting together your list of necessary features for your first home might seem like asmall task, but it’s a crucial planning step on your homebuying journey today. If you’reready to find a home that fits your needs, let’s connect.Be Realistic About Your Desired Features19When it comes to buying a home, you’ll want to be strategic. As a first-timehomebuyer, it makes sense to take a close look at your wish list and re-evaluatewhat features you really need.

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21Buying your first home is an exciting decision and a major milestone that has thepower to change your life for the better. Here are two things you can consider tohelp make your dreams a reality.Save Money with First-Time Homebuyer ProgramsBeing able to pay for the initial costs and fees associated with homeownership – whether that’sgetting a loan, being able to put together a down payment, or having money for closing costs – canfeel like a major hurdle. Fortunately, there are a lot of public and private first-time homebuyerprograms that can help you get a loan with little-to-no money upfront. CNET explains:“A first-time homebuyer program can help make homeownership more affordable and accessible byoffering lower mortgage rates, down payment assistance and tax incentives.”To take advantage of these programs, contact the housing authority in your state and browse siteslike Down Payment Resource.The Supply of Homes for Sale Is Limited, So Explore Every PossibilityIt’s a sellers’ market, meaning there aren’t enough homes on the market to meet buyer demand. So,how can you be sure you’re doing everything you can to find a home that works for you? You canincrease your options by considering condominiums (condos) and townhomes. U.S. News tells usthese housing types are often less expensive than single-family homes:“Condos are usually less expensive than standalone houses . . . They are also less expensive toinsure.”One reason why they may be more affordable is because they’re often smaller. But they still giveyou the chance to get your foot in the door and achieve your dream. Owning your home allows youto build equity, increase your net worth, and can fuel a future move.Keys to Success for First-Time HomebuyersBottom LineToday’s housing market provides some challenges for first-time homebuyers. But, thereare still ways to achieve your goals, like utilizing first-time homebuyer programs andconsidering all of your housing options. Let’s connect so you have an expert on yourside who can help you navigate the process.

22How a Professional Supports YourHomeownership GoalsA good agent will:Explain the ins and outs of contracts. When it comes to buying a home,you’ll sign various disclosures and contracts as part of the process. Before yougive any of these legally binding documents your autograph, your agent willhelp explain the terms and conditions.Keep you up-to-date on today’s market conditions. The real estateindustry is complex and dynamic. Pricing, mortgage interest rates, anddemand can change often. You need someone by your side who will keep youinformed on the latest trends and what they mean for you.Serve as your advisor in the negotiation process. Even after the contract issigned by the seller, there’s a lot of room left for negotiating terms after thehome inspection and the appraisal. Your agent will handle all the back-and-forth communication that comes with it.Give advice and share their experience. Let’s be honest, buying a home isemotional. When your offer isn’t accepted, your must-haves aren’t realistic, orthey suspect something is wrong, you want someone who will be honest withyou. Your agent’s expert advice and know-how will bring you peace of mind.While it may be tempting to turn to the internet for advice, nothing can replace theexpertise of a true professional. Buying a home is likely one of the biggest financialdecisions of your life, so it’s crucial to have the right team in place.

23“Buying a home is not just a financialdecision. It’s also a lifestyle decision.”- Mark Fleming, Chief Economist,First American

Let’s Chat.Jennifer RodgersBroker / OwnerGreen Key Real EstateJackson, MIjenniferrodgers@greenkeysellsmi.comwww.greenkeysellsmi.com(517)-398-2541I’m sure you have questions about the real estate process,what to expect as a first-time buyer, and what’s happening inthe market too. I can help with all of those.I’d love to talk with you about what you’ve read here and help youon the path to buying your first home. My contact information isbelow, and I look forward to working with you.