So we're looking at buying a home. Buying a home when you're in your mid-twenties, make money via being self-employed on the Internet, AND have a limited credit history is a pretty big challenge - but it's not impossible by any means. We've learned so much in the last few months trying to figure it all out, and we'll be sharing it all here to hopefully help some of y'all save a little time or just answer a few questions you may have. This is part of a multi-post series, in which we'll be covering taxes, different kinds of loans, down payments, etc.
Disclaimer: We are not financial advisors (lol duh) and are only here to speak on what we've learned and seen. We are not here to offer financial advice.
There are a lot of things you learn when you start the journey towards home ownership as a self-employed young adult. A few can be summed up in a simple bullet list.
- Walking into a lending office and starting a conversation off with, "So I run a food blog for a living" is akin to walking in and saying "I'm a drug dealer" or just casually pulling out a pistol. Some may gasp, or look blankly at you, but good lenders will take a moment and then smile and say, "absolutely, we can work with that." They're probably lying.
- Everyone has "a guy" that supposedly can help move some things around to make a case that you qualify for a loan. Literally every single person. Save all of the phone numbers given to you because you will quickly burn through this list looking for the person who is actually that good at moving things around.
- If you've been self-employed for less than two years (or tax seasons, really), just go stand out on the street begging for a home from a stranger because honestly your odds are better that way. We'll talk about this in the next post in this series, which will tackle the complex world of self-employed taxes, length of self-employment, and earnings and how it all affects your ability to buy a home.
- If you're young and have limited (but good) credit and parents who are willing and happy to co-sign for you (note: this doesn't mean you can expect money from them, in fact you should probably take them out to a nice dinner for doing this) that may be your best option for the first couple of years of home ownership until you can refinance and possibly remove them from the loan. We'll cover more about this in our post on co-signing, deeds, and titles.
I suppose the first thing we need to cover is: "why do you want to own a home right now?" - well, let's get into it. Matt and I are both from New Orleans and love the city too damn much to leave without having a piece of property to make our return very very easy. We want to travel, we want to maybe live in a few other cities for several months at a time, but we never want to feel barred from coming back to our own city because the process of finding a sublet or staying with a friend or parent seems too daunting.
Speaking of finding a sublet, let's talk about paying rent. In the four years we've been together, Matt and I have spent a minimum of $1300 for rent every single month, and for a solid year and a half of that we were spending $1600 a month. Now, if you live in New York, San Francisco, or LA these rent prices may seem low to you. Bless your heart. Yes we may look rich on Instagram but that's mostly just because we receive a lot of gifts and not a ton of money. Hey, every job has its perks and downfalls. Let's do the math on our rent for the last four years of living together.
4 years = 48 months. For 18 of those months our rent was $1600, and 30 of those months our rent was $1300. (18x1600) + (30x1300) = (28,800) + (39,00) = $67,800 rent paid in four years.
That is completely fucking insane, but it's a reality for so many renters in today's market.
So, besides the fact that we literally could've put about 20% down on a $350,000 home with that money, we're also faced with a quickly vanishing market of affordable homes in New Orleans. And that's happening in every urban area. Homes are sky rocketing in price alongside rising interest rates, older homes are being bought up and flipped for much higher prices, and all of this is happening while rent prices continue to balloon - making actually saving money for a house all the more challenging.
Finally, we want to buy a home because the idea of having our own space to truly do what we want (knock down a wall, replace countertops, etc) is a huge lofty dream for us. As renters, we can obviously paint and replace light fixtures (god, always replace the light fixtures) but at the end of the day we're limited by what we can do - and also we aren't tryna invest too much in a place that we'll have to walk away from in the next year or two.
As for what kind of home we're looking for, we'll get into the nitty gritty of that in another post. Mostly we're looking for renovation projects and homes that haven't been touched much since Hurricane Katrina that need a whole lotta work. There are many reasons we're going this route, and we'll go into it all shortly - promise!
If you wanna see even more of our home buying process, check back weekly or sign up for our newsletter to get updates and alerts on new posts on this topic!
^^ Pretty much sums up our expressions during this whole process ^^