Home Buyer's Playbook Part 1 - First Things First

Elena and Mateo have already started looking for homes online and have even created an inspiration board with pictures of their dream home and all the things that represent who they are. Like the crocheted potholders they got from tía, or those wolf and horse classic cobijas, that somehow still look like brand new blankets.

They would buy a home today if they could, like so many people in their community. In fact, The National Association of REALTORS^® 2023 Snapshot of Race and Homebuying in America notes that over the last decade, Hispanic Americans experienced some of the largest homeownership rate gains, now above 50%. That means more and more Latinos are finally having a chance at a little piece of the American Dream. And what better way for Elena and Mateo to figure out if they are ready for this step than by consulting a REALTOR^®, a member of the National Association of REALTORS^®, who will partner with them and share expertise about the market and process of homebuying.

TO BUY OR NOT TO BUY

Elena and Mateo have a general understanding that owning a home comes with benefits that can help bring financial stability to them and their future children. But it all seems very complicated! Thankfully Elena and Mateo have contacted María. She’s a real estate agent who is a REALTOR^®, and she is helping them break it all down, including some new terms related to the home-buying process, like:

“Equity build-up” means that with every mortgage payment they make, the percentage of the house they own increases. This is similar to how the gold jewelry received at a quinceañera represents the accumulation of years of savings and careful planning. According to the National Association of REALTORS^®, “home equity gains are built through price appreciation and by paying off the mortgage through principal payments.” Each payment enhances the overall value of their investment, securing a brighter financial future through home ownership.
“Value appreciation” is good news for them because as time passes, the value of their home can increase. In fact, “homeownership is the largest source of wealth among families… Low-income homeowners built $98,900 and upper-income households built $150,800 from home appreciation since 2012, an appreciation of 68% in the last 10 years,” according to research by the National Association of REALTORS^®. So if Elena and Mateo were to sell their home later on, they may get more than what they paid for it! Looks like abuela was right when she said things get better with age.

For Elena and Mateo, buying a home is starting to feel like an exciting rite of passage, like when Mateo first learned how to drive stick shift in his dad’s old truck.

LET’S GET REAL

Now before Elena and Mateo get too far ahead of themselves, they must first do a self-assessment. This will help them get ready to answer the following questions:

Is Our Network Chancla-proof?: It’s time for Elena and Mateo to find the best allies to join them on this real life telenovela. Aside from having their family and friends, they’ve already found María, an agent who is a REALTOR^® who has the expertise to get them through the journey to homeownership without too much drama. And of course, she can help them build a solid crew of professionals, such as a mortgage lender, a home appraiser and others—basically, trusted people they can lean on when the chancla comes flying at them full speed.
Do We Track Our Money Moves?: It’s time for Elena and Mateo to analyze their income, expenses, debt, and how everything ties to their financial goals. María connected them to a professional to help evaluate where they stand financially and what they can afford while also taking into account other expenses (like student loans and credit card debt).
Is Our Nestegg Ready?: In order for Elena and Mateo to buy a home they must first save for a “Down Payment,” which is the upfront money they pay when purchasing a home. It’s a big milestone that is both exciting and scary, just like when Mateo did la pedida for Elena’s hand in marriage.

One of the biggest misconceptions about a down payment is how much is truly needed. According to the National Association of REALTORS^®, “the typical down payment for first-time buyers has ranged between six to seven percent since 2018.” That means, it’s a lot more doable to become a first-time home buyer. But it does mean that Elena and Mateo will need to think about Private Mortgage Insurance (PMI), which basically is a type of insurance that lenders may require borrowers to pay if they are getting a conventional loan and making a downpayment less than 20%. There’s so much to consider! But many loan programs are available–like through the Federal Housing Administration–that allow for even lower percentages of down payments that will help Elena and Mateo get their zapato in the door.

A Credit Score that Would Make Abuela Proud?: A credit score is an important part of your finances. It’s helpful to think of it like a school report card. But instead of attendance and class participation, it covers their financial behavior. Remember that a higher credit score is anything above 740 and is one key to qualifying for lower mortgage rates. So it’s crucial for Elena and Mateo to lower their debt, pay bills on time, and consistently check their credit report for errors.
Do I Have Mom’s Patience?: There will be ups and downs – from loving the neighborhood, to possibly having offers fall through, to getting excited about living close to their siblings– but remember that Rome wasn’t built in a day. Finding the right home for them will take patience, guidance from María, a REALTOR^® who follows a Code of Ethics always keeping in mind their best interest at heart, and lots of palo santo-good energy. María will be with Elena and Mateo every step of the way. And if any hiccups do come along, she will be by their side to guide them.

This is a good time for Elena and Mateo to use the SUMA Rent or Buy Calculator (see below) to determine if it makes sense to continue renting, or instead, start putting that money into buying a home.

HOME RENT VS. BUY CALCULATOR

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WE ARE IN THIS TOGETHER

If there’s one thing that Elena and Mateo have now realized it’s that there’s A LOT of first-time home buyers crowding the market – like the swapmeet early Sunday morning. And this time, praying to la virgencita won’t be the only thing to get them through.

So what if Elena and Mateo had a comadre that knew exactly how to navigate the homebuying process, had friends who were experts in their field, AND were even guided by a Code of Ethics? That’s why they decided to work with a REALTOR^®.

Elena and Mateo were surprised to find out that while all REALTORS^® are real estate agents, not all real estate agents are REALTORS^®! What does that mean? These professionals hold themselves to a high standard of professionalism while helping future home-buyers.

Ooof! To think they’ve only scratched the surface. Let’s head over to the next segment to learn how María will assist Elena and Mateo in finding their first home.

REALTORS^® are members of the National Association of REALTORS^®

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