...before you buy a house. I was inspired to write this post today because so many folk I know are in the process of buying something or are thinking about it. A lot of them did the research and made long hard choices and decisions. A lot of others did not.And I have had enough of the ones who did not.
If I meet one more fool who is in pre-foreclosure because he/she bought the newest, biggest thing the bank would let them be foolish enough to buy, I'ma start slapping fools. ( And of course the number of black folks on there is disproportionate to everybody else--by a ridiculous amount) Can't fix nothing, can't furnish it, can't pay for it..but can brag about a decent address while living worse off than before the house. They become official member of the "House Poor" club.
Everyday, I run across the application of some fool who thinks he/she is Carlton Sheets (that's the "make a ga-zillion dollars a month in real estate" dude)or thinks that in a snap they will have the capacity to make real estate development deals like Jay-Z. They run after these crazy unconventional mortgage products like 110% loan/value, interest only, or go off and buy something at auction, etc. without really knowing the deal--just for the sake of homeownership (a.k.a, the greatest tax write off ever)
Why? I got my theories about why this is happening, but more specifically why it is happening to folk of color. First, a number of us grew up renters. The other is that many of us don't seem to like to ask for advice--distrustful of 'erbody. When I meet with people about making a loan, out of the folks who are not prepared a great majority of them are folks of color who have not done the required research and think you buy a house like you pick out some shoes. We gotta start being more strategic than that.
I mean isn't it funny (sadly) that more times than not, you can drive past a house and know the type of folk who live there? It's like someone failed to find out what a big responsibility having a home is.
Not everybody, unlike dubyah purports, needs to, wants to, or should be a homeowner. BeBe and 'dem with the porch roof getting ready to fall off and the dirt garden in the front is a prime example. If you are not prepared to deal with being responsible for physical upkeep (even in a condo) maybe you should keep renting--if it breaks, it's somebody else's bill. You can pick up and roll out when you are good and damn ready with relatively no muss or fuss and most of the time there is no yard work.
Yes, homeownership is a stepping stone to creating personal wealth. And black folks need to continue to get in the game. But, damn, can we know the rules and how it is played first!
Now, I don't own shit, but a car. However, since I sit around and deal with real estate all day, I thought I would share what I do know. To that end, for all of y'all who haven't bought yet or are mulling it over, a few words of advice:
1) If you have never owned a home, take a first-time homebuyers class. Usually its free. They go over budgets, financing, upkeep, finding a house,etc. Most municipalities have contracted this out to various non-profits who have no tie to somen mortgage broker or real estate person who might be skeevy for the sake of a kickback. So they advice, in my opinion, is usually pretty sound. Plus you get a pretty little binder and other free crap. Personally, I love free crap.
3) Check to see if your City, County, or State has a first-time homebuyers downpayment assistance program or grant. Its low-cost money or free if you qualify. Why use all of yours, when you can use some of theirs? (By the way if you live in a high-cost area as defined by HUD--people who make up to in some cases $80,000 might qualify)
3) If you don't have jacked-up credit, there is no reason to go to a mortgage broker first. Go to your credit union first, then a bank, then a mortgage broker. Brokers get to tack on extra points to the mortgage for their commission. However,if you are interested in, or need more creative or unconventional financing vehicles, then they can identify all kinds of unconventional mortgage products.
4)While you are doing this other stuff, develop a list of must-haves and negotiables about the type of place you want and start cruising the neighborhoods you want to live in. Look at what things are selling for and develop a budget based on what you can afford (with sufficient reserve for things getting jacked up) and then...
5) Get a realtor. I meet a lot of realtors. Some are excellent and very professional--it's their full-time job. Then you have the part-time house wife or other part-time types who take or leave it when they want and you can barely get them when you need them. Then their are the sharks, and in my opinion there are more of them than not--they will either not listen to you, not be honest with you about your options, or take you for whatever they can get. If you know exactly what you want, what you want to spend, what is a realistic budget--they will have a much more difficult time trying to take you on the "higher commission" ride
Okay. I am exiting my soapbox now. May the force shine brightly on you in your real estate purchasing process.