Hey everybody, it's Virginia.
So yall remember how our parents used to say, “Do as I Say, Not as I Do!”
Yeahhhh, this is another one of those stories LOL, but here me out…
I think pulling back the curtain on my home-buying process will help others make better decisions, & shorten the time it takes you to buy your home.
I think a good starting point is when I attended my first, first time homebuyer course (that phrase is always a mouth full lol).
The orientation was okay. I didn’t particularly leave feeling like I was empowered to purchase a home necessarily. I pretty much thought great, this will be hard. In all fairness, this is a reasonable thought to have, given all the steps required to purchase a home.
I get my credit pulled.
I did not have the required credit score to qualify. My utilization was high and I had a collections account. Following this, I did minimal work to improve my credit score.
After some time, I blindly (without checking my credit), applied for a mortgage. Needless to say, I did not qualify.
Fast forward maybe 1.5/2 years, to when I am working at a housing counseling agency.
At this point homeownership is still a goal of mine, but up until this point I haven’t really made it a priority. Meaning taking the necessary steps to actually become a homeowner.
So anyway, I met with a housing counselor (HC). We went over my credit. By this time I have HORRIBLE credit. I’m talking like, no more than 550. At this point, I’m also living check to check, so my savings are nonexistent.
While meeting with the HC, we made a plan. Not only to clean up my credit, but also to build a savings. Up until this point, I've had a W2 job since highschool. You’ll see why this matters later.
The plan addressed two main areas: credit & savings.
Remember the title, “Do As I Say, Not as I Do” ?
That DIRECTLY applies to what I’m about to share with you.. LOL.
Ideally you would apply these strategies in 0 -2 years, NOT over 4 years.
To fix my credit, I agreed to do the following:
Pay down CURRENT balances
Create NEW POSITIVE credit (I first learned about SELF Lender)
When looking to build credit, ALWAYS make sure you stay on top of your current bills.
Depending on how old the collections account is, it may fall off your credit naturally. However, if you have capacity to address your collection accounts, whether you come to a settlement amount or pay in full, you should.
Many times people mess up their credit and then don’t want to touch it. However it is nearly impossible to rebuild your credit without creating new positive credit
To Build my savings, I agreed to do the following:
Split up my check (50-30-20 Method)
Open a new account and do not order a debit card
This budgeting method suggests 50% for needs, 30% for wants and 20% for savings or paying off debt
I opened a new account for the “20%” and since I wouldn't have access to it, it significantly increased the likelihood of me actually saving it
But anyway, back to this long @$$ homebuying process.
The pandemic (2020) scared the hell out of me.
I immediately sought to get as liquid as possible, which meant finally taking my credit and savings seriously.
For this part, remember,, “Do As I Say, Not as I Do” … because I'm honest enough to admit.. the only immediate action that I took was implementing the 50-30-20 Rule.
It wasn’t until 2020, that I actually set up payment plans for my collection accounts, maintained my open accounts at 30% or less and opened a SELF Lender account. I continued the same positive behaviors into 2021.
Collection accounts are closed. Qualified for a car loan. Have a secured credit card. Got a line increase on an existing one.
SELF lender is acting as a SAVINGS ACCOUNT & REVOLVING LOAN (new positive credit. (SELF Lender will have its own blog post because that is just how awesome it is)
So now I'm basically on track to buy my house. Credit improving, savings coming along and the BOOM, I quit my job in summer 2021.
I PROMISE this is the last time… but remember how I said…. “Do As I Say, And Not as I Do?”
Because at this point, I am fully aware that at a minimum, the bank is looking for the following to qualify an individual for a mortgage:
Credit 660+ (but FHA does go as low as 550)
2 years of employment
You’re probably asking why I quit my job. The answer is I had to and idk. Anyways, I think by now you understand WHY I chose the title of this blog post lol. If you can keep the steady income, do it.
Learn from the experience I've gained along the way, about the ESSENTIAL missteps I've learned NOT to make during your home buying process.
I've put all of my experience, and the experience of my peers, into the programs and resources on our website.
Everything we offer is designed to give you everything you need to own and invest in property like we do at #BBT regardless of the market.
Put yourself in position today, and visit at www.buildingblockstogether.com/events.