Before You Buy A Home In 2022: Watch THIS

as the housing market starts to cool down you need to be aware of what's going on if you're looking to buy a home or if you own a home that way you can keep the most money in your pocket and that's what we're going to be going over today what's up everybody i'm just playing singh from the minoritymindset.com where money minds rethink rich buying a home over the last year hasn't been very easy i purchased a couple investment properties in 2021 and it took more work than before because now i had to go through more listings i had to walk through more properties i had to make more offers i had to go through more bidding wars but the market is starting to shift a little bit and now if you are in the market for a home or if you own a home you need to understand what's going on that way you can stay ahead of the curb and actually get the home that you want to buy i've been involved in real estate from a lot of different angles i'm a licensed real estate salesperson i'm a real estate investor and i'm an attorney but in this video i'm gonna be going over some of the things that you need to know if you're thinking about buying a home this year but before we get into these five things i need you to do me a quick favor and smash that thumbs up button below and if you're looking for some extra minority mindset we have a couple new youtube channels we have launched the minoritymaster clips channel where you can see some of the best highlights from this channel and we have our minority mindset spanish channel where you can watch our videos in spanish so if you want to check out these youtube channels and subscribe i'll put the links to where you can check them out in the description below if you want to have a chance to get your offer accepted on a home the very first thing you got to do is you have to be pre-qualified although the housing market has been cooling this is still a very hot housing market it is still a seller's market which means you still have way more people that are interested in buying a home and there are homes available for sale so that means you're still probably gonna see bidding wars you're still seeing a very hot seller's market where homes are getting sold very quickly it's not as fast or as hot as it was but it's still extremely hot if you look at the grand scheme of things so if you want to have a chance to get your offer approved by a seller you have to be pre-qualified when you're pre-qualified that tells the seller hey yeah i know i don't have 500 000 in my bank account to buy this property but the bank has already told me that they're willing to lend me five hundred thousand dollars that way i will have the cash to buy a property if you're not pre-qualified then the seller has to now wait and hope that you can get the cash from the bank to buy the property in this market no seller's gonna want to do that if i got three offers on a property one person offered me all cash they have this cash in the bank and they offered me 480 000 and somebody else was pre-qualified and they offered me 500 000 and then you had person number three who didn't have the cash in the bank and they were not pre-qualified and they offered me 520 000 the person's offer who i would definitely not take is this person because they're not pre-qualified i don't want to sit here and lose these potential offers just to hopefully get this extra 20 000 when i know that i can get this money here now between the cash and the pre-qualification the person i'm gonna take is going to depend on how fast i need to sell if i need to sell tomorrow then i'm going to take the cash offer but if i can be patient then hey i'll wait a little bit longer and i'll take that extra cash so before you go out and start looking for homes you need to get pre-qualified unless you have all the cash in the bank to buy the property without debt if you want to get pre-qualified in this market you have to be able to produce three things you have to show your income and prove it you have to show your assets and you have to show your credit when we talk about income the first thing you got to show is you have to show that you actually have a job that might be showing pay stubs or other proof of employment because they need to know that you're making money today and that you keep making money tomorrow then they're going to want to see at least a couple years of tax returns this would be your w-2 so they're going to want to see pay stubs and w-2s because their w-2 is going to show them that you have been making money consistently because when the bank lends you money they're essentially making an investment in you and they want to see that you have been making money that way they know that you'll continue making money so that way the bank knows that they'll keep making money then they're going to ask to see what assets you own and how much debt you have so they might ask about your car your student loans and if you have any real estate investment properties take a look at that if you have money in the stock market they'll take a look at that that way they can see okay this person is a good investment yeah they're making good money and they own assets they own stocks they own other investments that way we know that we're protected as the bank and the third thing the bank is going to look at is your credit score right now if you want to go and get a mortgage you really need a credit score of something around 620 minimum but if you want to get the best interest rates the best interest rates come somewhere in the 740 to 760 plus range anything above 760 is going to be all the same it doesn't matter if you have a 800 or 810 you're going to get the same interest rates as somebody does here but if you want to get the best interest rates you need to be in this range you can still qualify for a mortgage here you can even get a mortgage if you have a 580 but then you're gonna have to pay extra fees and extra interest but if you want to get the lowest interest rate possible and you want to save the most money on your mortgage you need a better credit score because this tells the bank that you're more likely to pay your mortgage back on time once you have a pre-qualification letter you know how big of a home that you can afford and when you make an offer now you can feel confident that you'll be able to produce the cash when it comes time to close on the property the second thing that you have to do is you need to know how to compete in this seller's market that we're in right now because we're in a very unique market where sellers have the upper hand this is just the reality so now what you need to do is understand how you could get on the seller's good side that way you can get your offer accepted the first thing you have to do is you have to be quick when you see a home that you like hit the market you need to go see it that day or the next day you do not have time to waste in this market because if you wait 10 days to go and see the property chances are if it's a good home it's going to already be sold so you need to go see this property quick before everybody else does that way you can make an offer quickly then when you make an offer you want to make sure you make your offer attractive if you cannot offer more money that might be closing quickly or being more flexible in the closing time that way if the sellers want to stay in their property longer you're flexible with them or if the sellers want to move quickly you can work with them you want to make sure that you express that you are willing to work with the seller with whatever they need this is also going to affect what type of concessions you should be asking from the seller because 10 years ago we were in a buyer's market where you had a lot of people selling their homes and not that many people buying their homes so now if you wanted to buy a home you could ask the sellers to do whatever they want you could tell the seller hey yes i'll buy a home but you need to put a new roof on their home and sellers would agree because they had no other option if they wanted to sell their home they had to make concessions for you now it's flipped so if you see a property that has a broken window or if it has some damage on the walls tell the seller that you take the property as is and they don't to make any repairs that way you're making your offer more attractive if there's a lot of work that needs to be done you can price that into your offer but you just want to make sure that you're giving your seller something easy that would they understand that they can just walk away and they don't got to worry about doing any of the work because you're going to handle that you want to make sure your offer is attractive because if somebody else comes in and they say yeah i'll buy the home but i need you to replace this window and you come in and say yeah i'll take a little bit less but i'll replace the window myself the seller is going to sell it to you instead of them and the third thing that you can try to do to make your offer more attractive is to give the seller a little bit of a love letter now this concept might sound really crazy but i have seen this work in the past where when you make an offer you write a letter to the seller saying why you want to own this home you see that hey i love this property it's right next to my sick parents i want to be able to live there and take care of my family and you just talk about why you deserve to own this home sometimes not every time but sometimes the sellers are going to read that and they will sell you their property even if you do not have the highest offer just because of that emotional letter you gave them so the interesting thing about these love letters is that realtors who are listing the property don't like them because that might entice their seller to sell their property for a lower price than what they could have gotten without the love letter which means the realtor is going to make a smaller commission and so sometimes you'll see listings or even states ban these love letters like oregon just announced that they're no longer allowing these types of love letters but if you are allowed to do it and you really want a property it doesn't hurt and the third thing that you can do to make your offer more attractive is to offer a price contingency essentially what this is saying is you can make a 500 000 offer on a property but then if they get multiple offers you will say that you're willing to raise the price of your offer up to 550 000 and you're willing to beat any other offer by 5 000 so now what this is saying is let's say you have multiple offers and somebody else offers them 525 000 that means that you'd be willing to offer the seller five hundred and thirty thousand dollars because you wrote in your offer that you're willing to beat any other offer by five thousand dollars and you're willing to go up to five hundred and fifty thousand dollars so if you really want a home you can add in this type of price contingency with that ceiling on it that will you let the sellers know that you're serious and that you're willing to beat any other offer the third thing you need to remember when you're going out to buy a home in this market is that you do not want to overpay because your home is a big commitment and the last thing that you want to do is you find a homemade you fall in love and now you overpay for the home and now you're stretching yourself thin to the point where now you have to live paycheck to paycheck just so you could buy this dream home that you didn't want to lose the first thing you gotta do is you gotta set a cap on how much you're willing to pay you have to tell yourself that this is the most that you're willing to pay for a home and that's it if you lose out on a couple bidding wars so be it more properties will come but you also want to make sure that you're not overpaying on fees because a home purchase is the biggest purchase that most americans will ever make and so it's very easy to get ripped off because just a one percent difference or a one percent fee can add up to thousands of extra dollars that you don't need to pay so this is where you got to be a little bit careful like if we're talking about your mortgage some lenders are going to charge you a whole lot more in fees for the exact same loan so shop around it's the same with your home insurance policy if you have a home or if you're buying a new home you want to make sure that you're shopping around for a home insurance policy because some home insurance policies are going to charge you a whole lot more than other home insurance policies for the exact same insurance the easiest way to shop around for home insurance and make sure that you're getting the best price possible is to use an insurance marketplace not an insurance company because an insurance marketplace like our sponsor policy genius will have different insurance companies competing for your business so now you don't have to call up different insurance companies one by one you just have to enter information onto policy genius which just takes a few minutes and then they will show you different insurance options that way you can compare and pick the option that's best for you the reason why i like policy genius is because one there's no additional cost to you and second if you use them and then you find a lower home insurance quote somewhere else they will switch you over for free plus they can help you keep more money in your pocket because policy genius helps their average home insurance and auto insurance reshopper an extra 1250 a year so if you're buying a new home or if you own a home and you want to make sure you're not overpaying on your home insurance i'll put the link to where you can learn more and get a free home insurance quote with our sponsor policy genius in the description below minority manager is a paid partner with policy genius so if you use them we will get compensated but there's no additional cost to you so if you want to learn more and make sure you're not overpaying on your home insurance i'll put the link to where you can do that in the description below the fourth thing you gotta understand is where we are in the market because there's a subset of people out there that are saying yeah i do want to buy a home but i don't want to buy it yet i'm gonna wait for the real estate market to crash and when the market crashes that's when i'm gonna come in and i'm gonna buy my home for super cheap the only problem with that is nobody knows when the real estate market is going to crash and nobody knows how big it's going to be right now at the time of recording this video the real estate market is very hot it's not as hot as it was but it's still very hot what that means is home prices are still growing very quickly so home prices keep going up and nobody knows when the housing market is going to plateau nobody knows when the housing market will correct and nobody knows how big this correction is going to be plus when you're talking about a real estate crash you really got to understand or pay attention to what factors could potentially cause a realistic crash because back during the 2008 crash the factors that led to that housing market crash were won you had a whole bunch of subprime mortgages second you had a bunch of ninja loans which stood for no income no job no asset loans so banks were not qualifying people before they bought a home and third you had these variable interest rate mortgages which meant that you would go out and buy a home and when you bought the home your banker would tell you that hey your monthly payment is only going to be 500 for the first couple years and then it's gonna go up a little bit but what they wouldn't tell you is how much it would go up by so what happened for so many people is you bought this huge home and you were only paying 500 a month for a couple years then a couple years go by and your payment went up from 500 a month to eighteen hundred dollars a month and now all of a sudden you don't have an extra thirteen hundred dollars a month to put towards your mortgage and this puts so many people underwater on their homes because now people started selling their homes they couldn't afford their payments and now everybody was trying to sell their homes and they didn't have any equity in their homes and this brought the housing market down so people went underwater we don't have those same factors right now banks are qualifying people if you want to go out and get a mortgage you got to get pre-qualified doing all the things that are talked about so banks are pre-qualifying people you're not seeing the same number of variable interest rate mortgages because most people are buying a home with a 30-year fixed rate mortgage so if interest rates go up or if something changes in the economy your mortgage payment will not change the concerns that we're seeing now are a little bit different than before because now the concerns our home prices are growing way faster than wages and it's not sustainable for home prices to grow this fast while wages are only growing this fast because there's going to be a point where now people cannot support this higher price of homes because well they're not making enough money to buy these homes this is where our super low mortgage rates are very helpful because the lower mortgage rates have been making up for the higher prices of homes and so when mortgage prices start to go up that could make buying a home a little bit less affordable which would make it harder for people to go out and buy a home but we don't know how fast mortgage rates are going to go up the federal reserve bank keeps saying that they don't want to touch mortgage rates until at least 2022 and probably until 2023 and even when that happens we don't know how fast they're going to raise interest rates and if something happens between now and then if the economy slows down if people are not going back to work then there's a chance that they could even delay this mortgage rate hike if they don't feel the economy is growing fast enough but even if you put that aside you also have to factor in the time it would take for real estate prices to come down because the real estate market the housing market doesn't work like the stock market in the stock market you can see the market crash in an instant because people have the ability to buy and sell stocks in a second in the housing market it doesn't work like that buying a home is typically a very slow process they can take anywhere from a month to a year to sell a home so if you talk about home prices coming down it would be a gradual process because then somebody would have to list their home for sale and if they don't see any offers then three weeks after listing it they might cut the price of their home by a little bit and if they don't see any more offers then it would take another month before they cut their prices again so it's a very gradual process just like how it's impossible for somebody to time the stock market it's impossible for somebody to time the housing market every asset class the stock market the real estate market is cyclical there are times when the market's going up and there's times where the market's going down but it is impossible to time the market so instead of just trying to time the market what's better for you is just to buy a home that you can afford that means knowing how big of a home that you can afford knowing the down payment and knowing your monthly payment if you know these three things find a home that you love that fits your pricing criteria and go out and buy it see i don't consider the home that you live in as an investment real estate can be an investment if you go out and you buy an investment property a rental property that's an investment because you're buying it for the sole purpose of making money and you're trying to generate some cash flow from that but the home that you live in this is something that you're using it's a liability it's something that you're just hoping will go up in value in the future but you're buying it to live in and so you really need to treat it like that if you're buying this property as a place for you to live as a place for your family to create memories then you got to look at financially the same way instead of trying to time the market if you want to buy a home buy a home that you love that you can afford otherwise you're going to have to keep waiting until who knows when not only can we not predict the economy but we can't predict what the government's going to do because the housing market has also been partially skewed because of all the government regulations things like mortgage forbearance and the eviction program these things have changed the housing market and so you got to remember there's a lot of external factors that you cannot predict and that you can't control i mean nobody thought that we were going to have a pandemic in 2020 a few years before that and the fifth thing that you need to understand if you're going out to buy a home right now is if you're making sacrifices to make your offer more attractive you want to make sure your sacrifices are reasonable and that they're not going to turn around and bite you in the you know what one of the trends that i've been seeing happen right now that really makes me want to pull my hair out is when people make an offer to buy a home and they do not have any sort of due diligence contingency a due diligence contingency is essentially where you tell the seller hey yes i made this offer to buy the home but after we accept my offer i want summer between three days and 10 days to inspect the property i want to bring in my own building inspector and whatever other inspectors i want and i want us to walk through the property and see what issues are in the property that we might not see i have purchased a lot of properties from single-family homes to multi-family to mixed use and one thing that i will not do ever again is buy a property without a due diligence contingency because out of all the real estate deals that i have done there was only one deal one property was a single family home that i purchased without a due diligence contingency and that single mistake cost me tens of thousands of dollars and that was the only property that i ever lost money on this is when i was just getting started as a real estate investor and i walked through this property and looked pretty decent to me it didn't look like anything was wrong so i made an offer and i got accepted and as soon as i got the offer accepted everything went wrong on the property we had to replace the entire sewage line and the plumbing line because apparently somebody who lived in the property prior to me buying it had took cement and they poured it down the main lines of the drain so water was not leaving the property we had to redo the entire mechanical and the electrical the property and the roof was not in good shape so then we had to come in and put in a brand new roof on the property all these things cost tens of thousands of dollars that i did not expect and this was just a major nightmare that could have been avoided if i just spent a few hundred dollars early on to get a property inspection before i bought the property so what's happened now in today's market is people want to make their offer better than somebody else's and so what they've been doing is first they lower the time of the contingency instead of saying i want 10 days to review the property they said i want seven days then five days then three days and now people are saying that they're willing to purchase the property without any sort of inspection contingency when you buy a property without any sort of inspection you are taking a huge gamble don't take that risk even if it's a small inspection contingency even if it's just three days as soon as you get the offer expected take your property inspector there the next day and inspect the property it can save you a fortune take it from me just because a property looks good when you're walking through it does not mean that everything is working good you have to look behind the scenes you have to look a little bit deeper and if you are not a home professional if you are not a contractor you need to use a building inspector to help you with that so do not sacrifice that make reasonable sacrifices the more prepared you are the better if you have a good real estate agent on your side they'll be able to help connect you with whoever you need they can connect you with a lender if you need one they can connect you with a title company and they can connect you with a building inspector that way you don't have to be the person going out trying to find somebody if you have a good real estate agent they'll be able to help facilitate this entire process thank you for watching if you enjoyed this video here's a video on things you need to know before you go out and buy a home and while you add it download our free guide on how to start generating passive income and as always keep hustling if home values are up when it comes time for you to sell then you're golden if home values are not up then that appreciation is not there remember if the 2008 recession taught us anything is that real estate doesn't always go up in value

Channel: Minority Mindset

Views: 160,965

Keywords: minoritymindset, minority mindset, minority123, jaspreet singh, rethink rich, financial education, financial literacy, finances, stock market, stocks 101, how to invest, money management, investing 101, building wealth, how to manage money, financial advice, investing, buying stocks, housing market, inflation, wealth, passive income, personal finance

Id: 3MQw7gJSSUM

Length: 19min 13sec (1153 seconds)

Published: Wed Sep 29 2021