When And How Should You Start Planning To Buy Your First Home? – A Good Place To Start If You’re New To The Podcast
Answering One Of The Biggest Questions Asked About How To Buy A HomeIf this is your first time here, do not be fooled by my dirty old man style. Deal with the cringy because you’re going to get more real facts, data, tips and tricks for first-time home buyers anywhere in the United States or Canada than you’re going to be able to find anyplace else. This is just for the United States and Canada because I don’t know a squat about the laws in Europe or Australia so I’ll stick to what I know. I promise you loads of useful information mixed in with a few bad jokes. If you want the best summary on how to use this show for you if you are a first-timer, welcome. Thanks for coming. Specifically to where you are in your specific spot in the home buying planning process. Read to this one first and I always tell people, “This is a great place to go.” Go to the trailer episode. It’s somewhere in your show feed. It’s called a Comprehensive Guide On How To Buy A Home, Wherever You Are At. It’s usually at the top, at the bottom or sometimes off of the side. It’s a trailer. It gives you the ins and outs of the show. Our episode is a great place to start.
When To Buy Your First HomeThe episode is happening now because I was at the office getting ready to go home but an audience sent me a DM. As I was responding to his questions in the DM, suddenly, that email that I was writing became a perfect show to wrap up this question that I get all the time. I hear this question all the time in my years in real estate. It’s one that people who stumble across my crazy world of first-time homebuyers have fun and facts like, “I’m a renter. I don’t even know where or how to start. When should I even start this whole process?” That’s the question. Not everyone asks me like a bad Southern California character. That’s just me. Let’s dive right in because I’m fired up. Danny DM me this question and its one that I hear all the time. This is the specifics of what he asked, “When would you recommend I reach out to someone? I’m the kind of guy that took a year to buy my truck because of the amount of research I did. I expect my home buying process to be a longer one compared to other first-time home buyers. I’m in no hurry to buy a home whatsoever mostly because I have a great cheap renting situation.” Sorry, he wrote it like that. That’s not me. “I know some realtors won’t talk to you until you’re pre-approved. From what I’ve seen, most pre-approvals are only good for 90-days. I don’t want to feel rushed like I have to buy a home within 90-days but I’m also not wanting to take multiple dings on my credit when that time comes. I also don’t want to waste a realtor’s time. What do you think?” Find a unicorn realtor and work with them for a year. You're going to exit your lease a superhero trained by Jedi masters. Click To Tweet Danny, I’m glad that you found me. I spent many years giving everyone the answer to these questions, making tons of podcasts, Instagram posts, YouTube videos, and even TikTok videos where this old man still bust a move, slide across the dancefloor and jacking at my old man knees. Since you asked, here’s your answer. When should you start? It’s a year out. That’s it. That’s exactly when I would start your planning or longer if you can. Many of you think that you’re a year out but you’re probably only three months out. Moving quickly could save you a ton of money but. So far, the way I’m looking at it is I’m the only one out there in the industry explaining this process to you. There’s a reason for that and I’ll get to that. Don’t sign another year’s lease until you check with a real estate pro. You could then find out what your timeline is. You might be surprised. If you do need a whole year, then sweet. Let’s sign that lease and then immediately get hooked up with a unicorn realtor who will help you out and also set you up with a unicorn mortgage broker. Why unicorns? You don’t see too many of them but they’re out there and they work magic. In a world of horse realtors and mule mortgage brokers, these two special and unique unicorn pros that you can find in your area are going to fast track you to achieving your goals. You walk into a new lease or renter and you’re renting so you’re clueless in the world of buying a home. If you find those unicorns and you work with them for that year, you’re going to exit your lease a superhero trained by Jedi masters. Instead of getting your training from having to do it all on your own, looking at Google searches and TikTok tips videos. I know I said that I do TikTok videos but mine are different. It’s telling people to go research other stuff and to listen to podcasts. I don’t try to sum up the entire process of how to buy a home just doing one dance to a dual episode. That’s not what I do.
The Biggest Problem With The IndustryLet’s get back to it. One of the biggest mistakes that almost all first-time buyers make is deciding to start their plan in those 90 days. It’s definitely not your fault. People think three months is the time to do it because that’s what you’ve been told. Danny even said it in his question. He said, “I know that realtors won’t even talk to you until you’re preapproved.” That preapproval he was talking about is 90-days. It sucks but he’s right. This is correct. That’s exactly what’s wrong with the entire real estate industry. It’s so backward, broken and absolutely not designed to help you, the first-time buyer, plan for your purchase unless you know where to look. Realtors and lenders don’t get paid hourly for their consultations. They get paid when you close. Most of them see helping you plan a year out as an unpaid workday and a big waste of their time. They’re not set up, nor did they desire, nor do they have any vision or forethought to realize that helping you, first-time buyers, plan to buy a house is priceless. They’re brainwashed by the old school industry or they’re too greedy to see that a bunch of extremely satisfied first-time buyers are given this red-carpet treatment that you deserve. Helping you to unravel the mystery of figuring out how in the world you do this is more valuable than any check that you’re going to get, pressuring the next buyer that walks in front of your face. Also, the entire real estate industry is only set up to work with buyers ready to go for the least amount of effort on their part so they get paid in the least amount of time. This is just information that’ll help you know how to get started and when to get started. It stinks to hear but it’s the truth. The industry for decades has let you, the consumer, figure out how to buy a home on your own. What’s crazy now is they’re still not even catching up. Even though you buyers out there got an app on your phone to help you fix your credit, to figure out how much you’re going to be reapproved for, to calculate your mortgage payment. With all that’s done, it’s made the industry even lazier. They think, “Great. They can figure all that out on their own. They then come to me show up at my listing and that’s an easy sale for me.” Now, while they’re waiting for you to use those apps and take your best guess at preparing, you’re probably losing lots of money along the way and definitely wasting a lot of time. There are things you can do beyond what you can find on your apps when you have the guidance of a professional. You can work on your credit and save money on your own. That’s great, but if you’ve got a true unicorn realtor and mortgage broker working with you and giving you all the action steps, you can cut that time in half, if not more. Why is that important? That means you stop paying rent sooner. I sound frustrated but I’m excited for you because now you get to know. To many of the so-called pros in this business, you saving money doesn’t matter to them because it doesn’t matter to their bottom line. They think eventually you or someone else like you are going to show up and they’ll get paid. They then realize, “I need to show up. You got a few tweaks I got to do to get you ready to buy. That’s cool. I can still turn it into a quick sale.” What sucks is they’re not even thinking the fact that you paid an extra year’s worth of rent when you didn’t have to. Never mind that you may be missed a golden opportunity in the market because the market shifted six months ago. One of the biggest mistakes that most first-time buyers make is deciding to start their plan in the first 90 days. Click To Tweet The apps are not going to be able to tell you, “I’ve been studying the history of the markets and I can tell you how things ebb and flow and where the market shifted now. There’s something that you can take advantage of to maybe even break your lease. It might be a smarter idea for you to buy now, instead of wait until next year.” They’re not going to tell you something completely out of the box. It’s so exciting. I can’t even find words to say it. There are some things that come along. There are shifts in the market. There are changes in guidelines. They could figure out that this might be exactly what you and your goals are trying to achieve.
The Huge GapThe reason why you are figuring that out on your own or talking to your apps to try to figure that out is you haven’t sat down and had a consultation with someone who knows that you are trying to get here. We can figure out a way to do it in twelve months but something changed. There’s a new loan program. There’s a new group of homes being built. There’s a new change in the credit or the down payment. That’s the information that you need to know. This information, you’re not going to get from these guys because they haven’t even bothered to talk to you until you’re close to buying the home. They are horses and mules. What do they care? They know their food’s coming. They’re not concerned about how it gets there. I call this the huge gap in the way that first-time buyers are served now. There’s a huge gap between the time that you first start renting and the time that you buy a house. I’m looking to fill that gap. Thankfully, I’ve been doing it successfully for many audiences since 2019. Lots of great success stories. I always think about one of my early ones. One of my favorites is the New Orleans couple that was older than Millennials or Gen Z. They’re closer to my age than probably most of your audience out there. They had been renting for years because they thought they couldn’t buy for a whole bunch of different reasons. Three months after following the show, they bought a beautiful home because someone helped them get creative and work the plan. I’m looking to fill that planning gap with pros who feel the same way that I do. I’m calling it Unicornation and it’s growing. All of you out there need it because I’ve been in the game for a long time. I know the way of lots of the real estate industry. I know the way they talk about you behind your back. It’s something that you should know. They have a classy way of labeling and classifying first-time home buyers. They label you like this, A-clients are 0 to 30-days before they buy. B-clients are 30 to 60-days before they buy, and C-you later if you’re more than 60-days out. Nobody’s got time for that. They probably don’t even know that video because they’re not that hip. You’re probably laughing because that video is few years old now.
Look At The Big PictureIn general, the entire real estate industry is working on a pre-historic business model and it sucks. It sucks that they do that and it sucks for you. Most of them don’t have the empathy or even the guts to focus on you because it’s more work for less money. Unicornation is trying to change that and if you’re looking to find someone to help you with that, it’s all in episode number 50. You’re here now. Maybe you are a big researcher like Danny. Let’s get into it and deep-diving more into the questions that he talked about. The more informed you are, the better deal that you’re going to get. Keep in mind, you can do all the research, find all the articles, talk to all the smartest people, and intake everything anyone ever said about buying a home, but this industry changes the rules of how to buy a home every single day. It’s probably weird for you to hear but loans change, market change, guidelines to how much you have to put down change, credit laws change, everything changes. There’s no blueprint and that’s the key. The big one is that the types of loans change all the time. It’s a bank thing. They don’t set the way to do a loan and keep it for ten years. They don’t keep it for ten days. The only thing that matters to you, the star of our show, is what’s going on with the market and what’s the type of loan that you get because that’s going to affect your purchase. Only a full-time everyday realtor and lender who does this with first-time buyers will know the ins and outs of the changing landscapes in real estate. Let’s keep going. Danny said that he was in no hurry because he’s in a great cheap renting sitch or something like that. That’s super rad. I love it when I hear people in a great rental situation but now you got to understand all the numbers. You have to look at the big picture. If the market’s going up, maybe you want to try to catch it. Can you afford a higher monthly payment or something higher than your sick, low rent that you’re working on now? What if you can afford that? That helps you build wealth because it’s going to be gaining appreciation as opposed to sitting back on the sidelines and taking a year to figure things out like it took a year to figure out how to buy a truck. That truck didn’t go up 19% in 2020, as real estate did. That’s the numbers. Is this home? Is this asset? Is it going to be the building block to your long-term savings? What if the market’s flat? This home’s going to be part of your saving account. The sooner that you get it, the better it is for you because probably for most of you, this home’s going to be that big building block of your savings. When’s the best time to start saving? Yesterday because time grows your savings. Now Danny is saying to me, “What if the market goes down?” First of all, it will go down. That is no if, it will go down. Market’s go up and they go down. What do you do? You need to understand your own numbers of renting versus owning with the potential timing of the market. The more informed you are, the better the deal that you're going to get. Click To Tweet I say this all the time, for most of you who are paying rent now, even buying a home in a down-market is a better financial decision for you if you plan to stay there for seven years. It’s about the number for most people. If you have questions about that, get deeper into it. Timing the market, episodes 29, 36, 40, 47 and 48. Do you think it’s an important topic?
Pre-Approvals And Credit ScoreDanny also said this, and this is a question I get all the time. I’m going to use his question to help all of you out. “From what I’ve seen, most preapprovals are only good for 90-days.” It sounds like my relationship in high school. “I don’t want to feel rushed like I have to buy a home within 90-days, but I’m also not wanting to make multiple dings on my credit when that time comes. I also don’t want to waste a realtor’s time.” I got to tell you that people who don’t want dings on their credit, they’re usually people whose credits are around 800. I’ll get to why it doesn’t matter later on. I had to see that first. The whole credit ding thing, I love that you’re so conscientious but it doesn’t matter. This is what I hear a lot. Let me explain to you how it works. We’ll start with the preapprovals 90-days. Here’s the best plan of attack when you’re like, “My preapproval is only 90-days. I’m going to wait until 90-days out to figure all this out.” No. Start a year or two years out. Get a unicorn realtor to refer you to a unicorn mortgage broker and start right then. By the way, go to a mortgage broker. Friends don’t let friends use Rocket Mortgage or other online national lenders. More on that in episodes 11, 16 and 32. At the very beginning, if you found this show now and you said, “I’m thinking about buying a house.” If you’re going to buy a house someday, and I don’t care if someday is next year or in ten years, here’s what you do. You do a full application like you’re going to buy a home this weekend. It’s a starting point. It’ll help you do your planning. Otherwise, you’re traveling through a map. If you’re freaking out now because of credit like, “Why would I do that? Why would I take a credit hit? Why would I do such a crazy thing?” I’m with you. I’m on your side. I’ve seen this and I’ve done this and helped people do this numerous times. Let me explain to you why it’s no big deal. Number one, it’s only a small hit on your credit, 2 to 5 points. It’s going to go away and come right back up in all the time that you plan to buy. Number two, you’re going to have to do it eventually anyway. Many buyers say they don’t want to run it because they’re scared of the hit. They do wait for that 90-day thing. What happens if you go in there and your score is great, but you find your dream house, you go put in the application for a loan and there is something a little weird on your credit? Maybe you need a couple of points to get a little better rate. Did you know that 35% of all credit reports have a mistake on them? Did you also know that 72% of all statistics are made up? I’m kidding. This is a real stat. Thirty-five percent of all credit reports have a mistake on them. I talked to someone, he was a credit guy who said, “I think it’s close 50%.” You have to get that repaired. Do you know how long it takes to repair? Usually at least 90-days. Get your credit score right now. It’s like the stars. The credit score you’re looking at on your phone is still 90-days behind. The way the stars you’re looking at are already blown up because the light travels and it’s so far away. That’s the way your credit score is. It’s never up-to-date. If you fix something tonight on your credit, you might not know about it for 3 or 4 months. You’ll know about it but your score won’t. Number three on this, the best ammunition for fixing credit is time. That’s what we were talking about. You can’t fix anything in 90 days. Number four, find out now where you’re at and you’re going to be able to use that time to work on it. Don’t believe the score that you get on that app too. I know you might have a great score on your app but realize you got 28 credit scores and only a lender can tell you what your actual mortgage credit score is. At some point, I did explain this in another episode but there’s a whole thing about mid-scores. It has nothing to do with your average. You’ve got 28 from 3 different bureaus, so you got all that scores out there. Whatever the mortgage one they pick, it’s your mid-score. If your scores are 760, 752 and 800, you get 760. Not an average. That’s the way it works. Number five, since we’re talking about that credit score, what’s the score you want to do? Here are the rules now. This might change if you read this in the future, but 740 is the cap. Anything higher than a 740 credit score does not improve the interest rate that you can get on a mortgage for a home. If you have an 800-credit score now and you’re freaking out about going in and getting a mortgage of full application now, first of all, if you do it now and you’re not going to buy for a year, it’s only 2 or 5 points and you’ll probably make that back up in the year easily. When's the best time to start your savings? Yesterday because time grows your savings. Click To Tweet Number two, if your score is at 800, 740 is the very top A-plus rating. You can’t get higher than that. Your score is only going to drop 2 to 5 points. You’ve still got 55-ish points to play with. Plenty of room. Nothing to stress about, but people ask me this all the time and that’s why I’m doing this show now. I don’t want you guys to stress. Number six is only a quick little side note for all your credit people who have your pennies in a bunch now. When you get to this point and you decide to start running your stuff, you can run your credit in the same industry multiple times. Some people say it’s 2 weeks, 4 weeks but it is a law. If you want to go out and buy a car, you can run your credit for a car loan approval at ten different dealers on one weekend. It only counts as one ding against your score. Danny also said that he didn’t want to be rushed by getting into an approval that’s only good for 90-days. We covered that. Until you get a real full approval, you won’t know where you even can begin. You don’t know where your starting point is. Should you wait, should you buy now, or is it waiting for the right market conditions? You don’t even know. You have to know where you are now. You can then put all the rest of your numbers into the equation. Knowing your numbers of renting versus buying and deciding when is the best time to buy for you. You might look at it and you might not even be able to buy it now. No worries. You at least know where you are and you can start to plan. You can’t make any plans until you have your own real hard data. Forget the 90-day limitation and think, “I have to wait until 90-days because that’s only how long the preapproval last.” Forget that. You’ve got the insider rules now. Play with them. You should know exactly where you stand, and then use your best friends in the process, time and professional guidance. That will help get you to the promised land more efficiently and with more maximum buying power.
What To Do Next?You heard all this and you’re like, “That’s cool, Sidoni but where do I go from here? You answered the basic questions and told me what it’s going up but what do I do next?” You find a local unicorn who gives you some more questions. They dig deeper to find out what your ultimate goals are. I’ve sat down with people and go, “Buying a house is not the right thing for you based on your goals and what you want to do.” You never know if people are moving to different places. It’s figuring out all those questions that go beyond. We then go and dig deep into the financial stuff and start the plan to get it done. If a realtor out there thinks that’s a waste of time and they don’t want to do it, they are no unicorns. I am here kind of judging. Those people suck but that’s just me. A lot of them are just doing what they’re told to do because no one has stepped back in the industry and realized that you should be treated better and you have the option. The cool thing is those unicorns are out there and you can find them. Whether you use the interview that I’ve got an episode 6 or you ask us, and we send you to some of these people, they’re out there. There are people that still want to help you and want to do this right. I got to get back into more of the stuff that’s going to happen next. After you do that, you find your unicorn, you get to your mortgage broker, you run your starting point application that we talked about, and then together, the three of you take your goals, and they devise the right plan for you. You fill in that gap that the real estate industry refuses to acknowledge exist. You get your action steps. That’s very important. Your mortgage professionals are going to give you action steps, depending on where you are financially now. It might take some effort, some time and some patience. Working on credit isn’t fun. The longer you wait, the worse it gets, but you’re going to be traveling now with a map created by experienced travelers. They’re going to be able to give you the shortcuts, the efficient routes, the best tips, tricks, tools, hacks, techniques, and plain old been there, done that, know-how. It’s one thing about us old folks. We got a lot of that been there, done that, know-how. That’s important because it’s going to help you get your dream. That’s the answer to Danny’s question, which I could have put anyone’s name in front of it because I’ve heard it many times while I’ve been helping people do this. Hopefully, that answered some of your questions too. I hope that it helped because I know you’ve probably had a whole bunch of other questions. This is episode 51, so I got a whole bunch of shows out there that probably have the answers to a lot of your questions. Go to HowToBuyAHome.com, look at the title of the episode. See if it makes sense for you. If you want to click on that, you can read right through them and go, “I’ve never heard about that,” or you could start at the beginning and listen to them all straight through. That’s fine, just forgive my goofiness at the first couple of episodes. That’s worse than this. The best ammunition for fixing credit is time. Click To Tweet If you have subscribed or followed, I appreciate it. If you haven’t, go ahead do that now. Please, if you got something out of this or any time in the past, help me start this revolution. Share this truth with your friends. Tech share it now. It’s easy on most podcast apps. Just share it and please, share and write a review. It does mean so much to me when you guys write those reviews because it gets more people to find the show. It gets more episodes that I can make and dinners that I can miss because I know this is for a worthy cause. If you have specific questions, find me on Instagram, @DavidSidoni, Twitter, @DavidSidoni, Tiktok, @DavidSidoni or you can check me out on the Facebook group too. There is a Facebook group for you guys called How to Buy a Home. If you’re new and you didn’t think it was possible for you to own a home, I got good news for you. You can do this.
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