I BOUGHT A HOUSE: The Early Stages

During my work hours, I would browse online to search for communities. I had settled to 3 and went to look at their products. I finally had settled on the community I wanted but needed to see the floorplan because I had questions about the closet. I need it to be spacious enough that made it easy for two to share for resale purposes.

One morning I went to visit the builder’s sister community 10 minutes away from where I wanted to build. I get to mingling with the sales rep. I let her know that I am actually searching for myself and what I was looking for. I narrowed it down to space as a key factor for me. Space for storage is huge for me. She looks at me and says, “We can go look at that plan but I think I have one you’ll love.” In my mind, I’m just like that isn’t what I came here for. However, I’m a Realtor and I should check out the floorplan for other clients. What I love about HistoryMaker Homes is the amount of space you get for your money. Their tagline is “More Space. Less Money.”

Spec home that sealed the deal

This is the home we toured. I was like okay. When we walked in, I was in love. It was EVERYTHING I somehow all of sudden wanted.

Kitchen…Cabinets…Counter Space…WHAT!!!! I knew I wouldn’t choose those cabinets at all.

It had space for days and the kitchen was a great size for just me. It was what I imagined my very first house to be.

I went back to this house for the next 3 weeks showing anyone who wanted to venture with me.

I finally went one Sunday with my friend Lauren and she’s a sensible friend. She was like you just have to pull the plug. I was like I don’t know. Andrea, she said, you like this house. You’ve been out here 3 times this week you might as well buy the house. Conversation with my mom helped the situation. She said to me, Andrea, no one is ever ready. We weren’t “ready” to buy this house but we had help from my dad and another family friend. I’m sending you $1000 and you add the other and go build your house.

That was all the confirmation I needed. I went out the next day with my checkbook in tow.

I was building my house.

The day I went there with Lauren one of the preferred lenders was at the model home. He said I shouldn’t worry about student loans as I could possibly go conventional and be okay. I was nervous about the calculation of student loans and the taxes I’d owe from 2016 tax year. I showed him my profit and loss statement along with 2015 tax return. I asked how much income did I need to show to realistically buy the house. My CPA and I worked together to be reasonable on the tax amount owed and for qualification purposes as well.

When you are self-employed, your income for home purchases are based on a 2 year average on the adjusted gross income. That means you can’t write everything off as you normally would. You have to show some income.

I was approved for a home loan or so I thought. A few days later I get an email to start the design process of my home. I’m excited, nervous, and more. I setup the appointment for a Monday but go by on that Saturday to browse the design room on what they had to offer. By that Monday, I pretty much decided what I wanted my house to look like.

Cabinet and floor selections
Where all the creativity went…Maybe a little.
Debated back and forth with myself on 30″ inch cabinets or 36″ inch cabinets in the master. Went with the latter.
It’s starting to coordinate
Brick and stone options

By this time I had already chosen my lot. I decided to go with a premium lot which backed up to this high end community that would continue towards my neighborhood in a few years. Once I saw how the homes lined up, I was sold.

Preview of what my backyard could look like

Hey, those homes in that neighborhood were already in the high $300s on the other side of the highway. There isn’t any telling what they would be in the next few years which would be valuable for my home.

After the first design room, I was excited but nervous to tell a soul. The only people who knew were a few close friends of mine and my parents.

The second showroom appointment was supposed to be literally a week later to finalize my designs. However, I couldn’t schedule the appointment until my lender sent an approval. I call to see when he was and his answer: My dear, you aren’t going to qualify. I’m sorry.

If you know me, no is NEVER the final answer. Background: The income that I felt comfortable with paying taxes on averaged with 2015 tax income made my debt to ratio high. I assured him a 1000 times that I’d pay whatever I needed to to make the situation work. I honestly don’t think he believed me but he said we can do it.

For 2 more weeks, he still never sent the approval. We discussed this more than once. Every time we would talk he would say, you’re good to go. I’ll send it over to the design team. I would be ready for the second showroom appointment and they’d say, “Andrea, we can’t schedule the second appointment without the pre-approval from the lender.” Back to conversation #50 with lender one. I would say, I thought you said I was good. Why hasn’t the pre-approval been sent? (This is when I learned being the REALTOR on your own deal is hard…who is there to help diffuse the issue when you stress out?) He even told me to go back and edit the taxes and just bite the bullet to pay $25,000 worth of taxes. That would make my debt to ratio lower. Umm, come again? Let’s just say that was our last conversation.

I went back to my sales rep and said who’s the next lender on your list because this one isn’t working. I had too many incentives tied to the home. Initially I wanted to use one of my preferred lenders but the incentives to build and close were far too great to let it go. I went to lender number 2. He was quick and had me approved after our conversation. Final design room was appointed and my reality was becoming real.

However, the first lender’s words echoed in the back of my mind each time I went to visit my house. My mentality has always been to prove people wrong and damn it, I was going to prove that first lender wrong.

Future location of my house
First choice of front door
Kitchen faucet
Master tub sample
Separate shower
Sink choice in all bathrooms
Style of second bathroom with tile on the wall
Stain selection for front door

I went in thinking I was going to do white or gray cabinets. I saw these smoke cabinets and knew I needed them in my home.

Final front door selection.

It was all starting to be too good to be true…in this case, it was. Lender number 2 had inside issues that affected me. *deep sighs*

Stay tuned for Part 3. To catch up, read Part one of I BOUGHT A HOUSE.

I BOUGHT A HOUSE! What I Learned? – The Financials

I’ve been a REALTOR® for 4 years and have been trying to purchase my own home in just about that same amount of time.

2012 – 2013

Here’s the backstory. I graduated grad school in August 2012. I started working for a nonprofit in South Dallas in January 2013 where the premise of our business was revitalizing South Dallas and homeownership was one of those ways. There was no way I could talk about the values of homeownership without buying my own home. However, credit stood in my way. I knew I made mistakes from college that hunted me. The income and the debt weren’t syncing to make it right. Until one day, I decided I wanted a house. Working at the nonprofit, I knew what credit score I needed to have. I believe when I started on my credit, my score was at 585. I needed a minimum of 620 to get a down payment assistance program and go from there. I managed my money, I saved, and I would scroll online. Looking for a home was the easy part. It wasn’t until I found a home around the corner from my then apartment that was perfect. It had a pink and green room and a doggy door. It was perfect for me, so I thought? I called the Realtor to show it to me. It was a foreclosure listed at $120K. I had already did a cost analysis being a Housing Counselor so I knew how much I could possibly afford.

When I walked into this house, the ceiling was caved in. You could see mold and so much more. There was mildew around the doggy door and I wanted to run. RUN THE HELL OUT and kill the dream. LOL

I immediately went back to the drawing board. The fixer upper home was NOT in my budget. It sounds nice on paper but what people fail to realize is the cost of fixer upper. If you can barely afford the downpayment like I was at that moment, a fixer upper may not be for you. Cosmetic updates and fixer upper are two different things.

I had gotten my real estate license in between that time and decided this was the chance for me to be able to really scour through the market. I connected with a few lenders and found one I liked to work my own house deal. She qualified me for $120K which was right on the money for the foreclosure home that I saw. However, at that time, I had started doing deals in real estate and was ready to leave my full time job. I told the lender that and she was like yeah to get a home being self-employed, you’ll need 2 years of tax returns. What? That meant I would have to wait 2 years before coming back to get qualified. Well, 2016 it would be.

FAST FORWARD TO 2016!

I’m ready to get a mortgage. I’ve made decent money in real estate so I should be good. Well, I went with a different lender that I worked with. He approved me but at this time $140K. You know why? As a self-employed person, we pay A LOT in taxes. I saw the first estimate and was like no thank you. Therefore my income was lower than I originally told the lender (self-employed people are qualified based on the income they report to the IRS) and the average of 24 months only qualified for $140K. I knew where I wanted to live and $140K wasn’t even buying a door to the house. I spread out my options within Denton County between Little Elm, Aubrey, Cross Roads, Oak Point, The Colony, Carrollton, and Lewisville. I knew for sure I loved the 380 area however homes were around $180-200K. I halted the process then and said I would try again in 2017. I knew my taxes for 2015 and 2016 combined would have more income than my taxes for 2014 and 2015 were.

2017

By tax time, I knew I had to make my numbers stand out to buy my house. In simplest terms, I knew I couldn’t write off everything. I had to strategically plan it out and know what the estimated taxes would look like. Thank GOD for a past client would recommended their CPA. I saved so much in taxes and still claimed the income that I needed. It was at that moment, I was able to purchase a home up to $246K. Originally, my budget was set at $180K. I set myself up on a search on the MLS for homes under $200K in my desired areas. I noticed that the homes that were under $200K were getting slim. I had to act fast and knew I wasn’t getting under $200K in my desired area.

This was it. I was finally going to do it. I scoured through the area that I wanted to buy in after narrowing it down to 3 communities. I LOVED new construction and thought it would be the best way to save more money to purchase, give me a great timeframe, and sign one more 6 month lease to end apartment living forever.

*Check out the next blog/vlog as I walk you through my home buying process.*

Feeling inspired to begin your home buying process? Visit newavenuerealty.com.

Hello 2018!!!

I’m late but HAPPY NEW YEAR!!! It’s been hard getting things back into full gear mode for the new year. I’ve basically focused on finishing clients out who I feel should have closed in 2017 but that is neither here nor there.

It’s crazy that I have two separate clients who have had the same delays with their homes being built. I am not sure why but that has been the case.

2017 taught me a lot to give to new clients for 2018 and beyond. As much as real estate becomes second nature to me, it’s new to others. I realize my role as a Realtor is still to educate and do it more often that not. Markets in the United States are vastly different even in the same state. It helps to teach others how DFW market is going and how it works for them.

I had someone ask if the market was dried up. Well inventory has always been low for the past few years and the lower your pre-approval the less chance you have about finding your home. Does it mean it isn’t out there? No, but where you look should change. The style of home could be it. Stay open and on course. Do note what is cosmetic CAN BE CHANGED.