Housing costs around the world are gaining altitude like a SpaceX rocket. Growing families are expanding their current homes and adding bed/bathrooms and sheds or barns for storage to avoid entering the market. The likeliness for a non-homeowner to achieve home ownership is decreasing as income levels are far from achieving commensurate increases in real estate.
As renters, we need to overcome roadblocks to a place we will call home. In the next few minutes, we will touch on each criterion to advance you to homeownership together. The almighty dollar, cabbage, blue swimmers; the cash will always be king. Whose cash you use is where we slice the loaf.
Here are the basics of the Credit, Cash, Collateral Triangle;
Credit is the financial measurement of your character. There is a meta-language in anything, and bankers need banker language for clarity because money is on the line, and credit rating is how they know you.
- Credit is no mystery, but it does take time and effort. Legal, financial, private, and government public data is compiled by artificial intelligence (AI). Our character is on display for many to use. People can invest considerable resources to remove poor credit incidences. “Prevent them” is easy to say. How?
- Live within your means, pay on time, and pass on the current trends or latest things. However, you must not stop all credit transactions. Maintain three to five “active credit lines”; that include one utility bill, one insurance payment, and your monthly rent. The others are for routine expenditures you can afford, such as food and fuel.
- Rent is tracked and can be shown with a signed contract and confirmation, but it is easiest if the transfer is shown from the account at the bank you hope to finance your home with. You will build credit and a stable history.
I do not come from money and am the 9th child of a one-trade-income family. Living within your means had to be practiced. You cannot save until you learn control at this level. The postponement of gratification should really be its elimination if you want to set yourself up for success. I know that sounds near spiritual, and while it is not, the freedom from the burden of “keeping up” nearly is.
- The value of your own space for growth and development is more than you know. Build a relationship with an insurance provider with rental property insurance coverage added to the current policy on your auto.
- As a mortgage lender, I counseled people to home ownership many times and consistently had to keep their focus directed on necessity, not the maximum 30% of their income. Either save money for a larger down payment or increase your income, but life is easier around 23% housing cost.
Collateral is the toughest of the three, in my opinion. How do I start with nothing? Learn. Learning is nearly free. Study your employer’s mutual investment plans and government treasury bonds or securities. You will need these slow but steady investments in your beginning portfolio.
The bank you intend to finance your home with should also have various yield savings accounts and term deposits. Stay away from stock trading until you have money to lose.
