I Know What I Can Afford - How Do I Prepare Financially to Buy That Home?
You’ve figured out what you can afford in a home, but how do you turn that into a real plan? In this episode, Ralph shares the practical steps every Christian should take to save, build credit, and avoid stress before signing on the dotted line. If you’ve asked this question lately, today’s the day you finally learn how to prepare financially for a home.
Check out the full podcast episode here
From building a targeted savings plan for your down payment and closing costs to keeping your credit clean and avoiding new debt, Ralph lays out a clear, faith-filled path toward peaceful homeownership. With biblical insight and practical advice, this episode will help you steward your resources wisely and take confident steps toward the home God has for you.
Chapters:
- 00:04 - Preparing Your Finances for Home Buying
- 01:24 - Preparing Financially for Homeownership
- 03:30 - Financial Preparation for Home Buying
- 06:10 - Building Your Financial Foundation
- 09:00 - Financial Preparation for Homeownership
- 09:58 - Navigating the Mortgage Maze
Takeaways:
- Figuring out what you can afford is a major first step towards homeownership.
- Creating a targeted savings plan for down payments and closing costs is absolutely crucial.
- Maintaining an emergency fund is essential to navigate unexpected expenses when buying a home.
- Reviewing your credit score and keeping debt levels low can save you money in the long run.
- Avoid taking on new debt before applying for a mortgage to keep your finances stable and lenders happy.
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00:00 - Untitled
00:04 - Preparing Your Finances for Home Buying
01:24 - Preparing Financially for Homeownership
03:30 - Financial Preparation for Home Buying
06:10 - Building Your Financial Foundation
09:00 - Financial Preparation for Homeownership
09:58 - Navigating the Mortgage Maze
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You figured out what you can comfortably afford for a home.
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That's a huge step.
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But now comes the daunting part, actually getting the money
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together and getting your finances ready for this massive purchase.
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If preparing for the financial side of home buying feels overwhelming to
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you, first of all, you're not alone.
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But stick with me because we're gonna break down exactly how
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to do that on today's show.
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Hey there, and welcome back to your Daily Financially Confident Christian.
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I'm Ralph and it's great to be with you again.
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As always, this is the show that helps you answer that question, how can I
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become a financially confident Christian?
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And we're deep into our home ownership sort of mini series here in the midst
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of our main series, and that's dealing with the stress of money worries.
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And yesterday we had a real honest and frank communication about
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deciding if and when home ownership is the right financial move for you.
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I hope you really enjoyed that episode.
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If you miss it, I'm gonna encourage you to check it out.
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But we talked about how you can assess what you can comfortably afford.
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We looked at your budget, not just what the lender might offer, because truth
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is the lenders will tell you you might be able to buy something, but you're
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not gonna be comfortable with that.
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But today we're gonna take the the move and go to the next step,
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and that is, Hey, I've decided.
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It's time for me to start preparing to buy a house.
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So we're gonna talk about some practical financial preparations needed because
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once you decide on buying the house, the next step is to really have this process
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in place, because I get it, the financial process can feel complex, it can feel
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stressful, but here's what I'm gonna tell you today, with focus preparation,
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you can navigate it with greater peace.
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So let's tackle the question for today.
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I know what I can afford.
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Now how do I prepare financially to buy that home?
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Once you've done the math, you know the realistic price range, and you're excited
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about the possibility of buying a house.
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Then you start thinking about the specifics and coming up with that big
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down payment money, or maybe navigating the mortgage application process and
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then understanding the closing costs.
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Trust me, those can be thousands of dollars.
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Well, guess what?
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Tomorrow we're gonna talk about the mortgage application process, and
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the next day we're actually gonna talk about those closing costs.
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Then the next thing after that, we're actually gonna talk about managing
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the expenses once you buy the house.
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But listen, managing the expenses during this transition are major
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stressors for a lot of people.
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They're complex, and the sheer amount of money involved can feel
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daunting and anxiety inducing.
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Trust me, I've been there.
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But here's the thing.
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You need to understand.
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Preparing diligently for a major financial undertaking, like buying
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a home is actually a very crucial part of why stewardship, and I
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wanna connect it to the Bible.
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I wanna correct it directly to the biblical principles of careful
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preparation and ensuring resources in order before making a major commitment.
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We talked about this yesterday, that Luke chapter 14, verses 28 to
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30 reference, talked about the cost of building that tower, making sure
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you're, you're counting that cost.
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I. But preparing financially for a home purchase is an act
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of responsible stewardship.
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It just is.
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It demonstrates foresight in it, demonstrates diligence in really
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managing the resources that God has given you and trusting him 'cause
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you're going to need him through this process, So now you're sitting there
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going, Ralph, okay, you've got it.
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I figured out what I can comfortably afford to buy.
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What can I do now?
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How do I move from knowing what I can afford to actually being financially
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prepared to actually buy that home?
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But Ralph, I wanna do it with peace, and I don't wanna get stressed out.
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Like I've seen some of my friends who have gone through the process
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and they are just super stressed out.
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Well, I've got a solution for you.
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I've got an actionable step.
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First thing you've got to do is start building up the necessary funds for
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that down payment, for those closing costs and for those reserves, because
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I wanna make sure you're in, in a good financial profile that is strong
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before you get involved in this too deeply, because you got to really
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be aware of discipline, savings and if financial cleanup in preparation
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for the home purchasing process.
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So I've got one action item for you today to help you focus on that practical
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financial preparations for buying a home.
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The first thing you absolutely must do is create a targeted savings plan for
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those down payment and closing costs.
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So once you've decided on how much you are going to spend for the house, then
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you gotta start thinking about how much am I going to need for a down payment?
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There are different programs, FH, a, va, all those kind of things,
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but you really have to start laser focusing on are you gonna need
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5% down or 10% down, or 20% down?
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And you've gotta set a specific dollar amount that you need
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to save without down payment.
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Put that in writing, make a special account or something like that.
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Then the next step is to actually research the typical closing cost in your area.
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Now, I will tell you generally it's a general statement.
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They generally run between two to 5% of the loan amount and, and you also
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have to add a little cushion to that.
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Once you do that, then create a focused savings goal for this amount as well.
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Go back and look at your budget and see what you can increase in
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your savings towards that goal, because here's a little truth.
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Every extra dollar saved, builds momentum for the future.
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So once you've got that done, you put that savings plan together, then what I'm gonna
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encourage you is continue to strengthen or maintain that emergency fund.
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Because here's the thing you need to understand.
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Lenders want to see what they'll call a financial reserve.
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They wanna make sure that you have money beyond that down payment, because guess
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what, they realize there are things that are gonna happen once you buy
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this home and you're gonna need that emergency fund for those unexpected
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home repairs or maybe those maintenance issues that you weren't expecting.
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I remember buying my first home two or three weeks after I bought it.
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The air conditioner blew up.
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Fortunately, I had set aside some extra money and I was
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able to go take care of that.
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But again, I'm gonna really try to get you to focus on building that
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solid, emergency fund, three to six months of essential living expenses
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in that separate account, and that's in addition to your down payment.
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Now, while you're in this process, as you're saving money, you're starting to
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think about building that emergency fund.
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Another thing I'm gonna highly encourage you to do is
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review and polish your credit.
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Again, look at your credit score.
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Look at your credit report, because that's gonna significantly impact
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your mortgage interest rate.
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So again, review it because if you don't guess what's gonna happen, the
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lender's gonna submit it to underwriting.
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Underwriting's gonna say, Hey, wait a minute, Ralph, we got some problems.
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Once you do that, then focus like a laser on paying all your bills on time.
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Keep those credit card balances low.
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As we talked about many times on the show, below that 30% utilization, I.
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Make sure you do that.
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And here's one big takeaway from today.
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A lot of people don't talk about this while you're in this process, and I can't
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stress this enough, hold off on buying any new large purchases or going into debt.
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And I'm gonna tell you basically for, for six to 12 months prior to getting
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a mortgage, don't take on any new debt.
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Go get, don't go get a new car loan or open a new credit card
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or making any large purchases on credit because here's the thing.
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It can negatively impact your credit score and your debt to income
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ratio, which is gonna make it harder to qualify or get a good rate.
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So why do these things help?
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I'm gonna tell you right now why they help 'cause these focused actions directly,
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they fight that struggle and that stress.
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You've gotta plan.
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I. You're prepared, so you're not gonna feel unprepared, and you're gonna
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build the necessary funds both in that emergency fund, so that way you can have
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security for future homeowner costs.
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And listen, policying, your credit score and your credit is just gonna
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give you a better interest rate and save you thousands of dollars over time.
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And if you don't go in the new debt that keeps your financial
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picture stable for the lenders.
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And this is all about empowering you to get through this to the
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house that you want because listen.
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Home ownership is a blessing.
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It does not need to be an overwhelming burden.
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Well, let's pray together today.
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Father God, we just thank you for the desire for us having a stable home.
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And Lord, we confess that financial preparations for buying a home
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feel significant and for many of us, they feel stressful.
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So we just ask that you would grant us the discipline Lord and the perseverance
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needed to save diligently for that down payment and plan for those closing
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costs and build that emergency fund.
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Lord, we just ask that you would give us wisdom in managing our budget and managing
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credit during the preparation phase.
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Help us to maintain, again, that strong emergency fund for the
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future needs of home ownership.
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And Lord, just guide us through every single financial step of this, ensuring
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our preparation is thorough and rooted in wise stewardship and grant us
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peace throughout this process.
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And we ask this with confidence.
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In Jesus name, Amen.
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Listen.
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Discipline.
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Financial preparation is your most powerful tool for reducing
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stress when buying a home.
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Listen, buying a home is stressful.
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Moving is stressful, but focus on savings.
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Focus on maintaining those reserves and keeping your financial picture clean.
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'cause you're building the foundation for a peaceful home purchase,
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even if it's a year, two years, or three years down the road.
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And if you found this episode useful, I'm gonna encourage you.
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Other people are going through this same thought process right now.
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I'm gonna encourage you to share it with them.
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You can find resources and connect with the show right at our website that's
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at financially confident christian.com.
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And while you're there, I've got a special gift for your journey.
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For the first 100 listeners who go to the website, financially confident
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christian.com/master, I'm gonna give you a free copy of my book.
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It's called Mastering Your Finances.
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It's quick, it's a powerful redesign, is a starting point to help you
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break that cycle of financial shame and really step into confidence.
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So again, go to financially confident christian.com/master
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and get your free copy today.
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Now, tomorrow, as I said, we're gonna be talking about the mortgage itself
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and how to navigate that mortgage maze.
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I'm gonna talk about the different loan types and how to choose the
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right one so you don't wanna miss it.
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So make sure you join me tomorrow.
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Now let's all go out there and be those financially confident Christians.
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You can do this.
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I have confidence in you.
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Have confidence in yourself.
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Stay financially savvy.
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God bless you today, and you have a great day.
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I.
