Owning a home today has come to appear like the real apex of success, at least to some of us. As a young person, you are expected to finish schooling, secure a well-paying job, and then acquire assets/properties, most importantly a home. Let me share with you the story of my first home acquisition (which I made before I was ready) and where it got me.
Do not get me wrong, it is great to own a home, but wrong timing and lack of preparation can cause significant problems.
So, sometimes in 2009, after my schooling, I got a job from which I earned a hundred thousand naira monthly. This seemed too good to be true for me at the time, because I had no prior experience. Well, they say miracles do happen, I guess I believed in one. After my first six months on the job, I had rented a well-furnished accommodation, and my lifestyle was quite comfortable. I took good care of my parents and siblings back at home too. All of these were the fundamental definition of success for a young person in Nigeria. But I wanted to do more; I wanted to build wealth, I wanted to own a home, and I felt the time was right. This was the moment that completely redefined my relationship with money.
The real estate agent I got to help me source for a property in Lagos warned me that I was not ready to buy a home. I ignored him, thinking he was not sharing my big dream of building wealth. Unknown to me, he was right. I laid out my finances to one of the property companies I could find and was told that my debt-to-income ratio was too high — I was viewed as a liability. This automatically would affect my ability to secure a loan.
According to growacorn.com:
“Your DTI is a percentage that compares your total monthly debt to your gross monthly income, and lenders use your DTI to determine your borrowing risk. To calculate your debt-to-income ratio, you must first add up your monthly debt payments, divide that number by your gross monthly income, and multiply that decimal by 100. Most loan providers in the real estate sector want borrowers to have a debt-to-income ratio below 36%. My personal debt-to-income ratio was higher than 45% at the time, which in the mortgage world is a red flag”.
What Did I Have To Do Next?
I soon realized that I had to improve my DTI by improving my finances, becoming debt-free and improving my overall lifestyle. This seemed easy to achieve — just get a higher paying job, save more and boom, gain access to a bigger loan and buy my dream home. Unfortunately, it did not turn out that easy; it took me another year to get a better job because I had to gain more experience to be qualified. When I eventually got the job, I had to start saving much more plus meet up with a new standard of living. All these took me approximately three years. The good news was that after all these extra efforts, I was finally deemed qualified for a bigger loan. And guess what? I got my dream home. I felt fulfilled as this was what I wanted for a long time.
The Reality Of My New Home Began To Set In
That period of joy, excitement and triumph only lasted for three weeks. This was the amount of time it took for my washing machine and the kitchen sink to start leaking. Being a homeowner was not only about paying the mortgage. I soon realized that every piece of my home upkeep was now up to me. This was my new reality, but this understanding came far too late and at a far too expensive cost. After just five months into my new home, my parents had to assist me financially in addition to my savings for the maintenance and repairs in my home. There were other expenses like sewage and sanitation fees, estate levies, security and so on. You could say I got things done one way or the other, but I was mentally exhausted. As I looked for a way out of this financial tight space, the only idea that came to mind was selling the home I worked so hard to get.
It was not until this moment I realized that I went into being a homeowner without an understanding of what it truly meant.
I failed to research the many costs that were involved in owning a home — from cleaning fees just after buying the home, to paperwork fees, to furnishing, levies, maintenance, sanitation, and insurance, just to name a few. I also found out there is a persistent lack of transparency about the ins and outs of buying and owning a home. It can be hard to see the realities of the experience when it is often viewed as an achievement.
I failed to educate myself before making such an important purchase.
While I still maintain that homeownership is a great way to build wealth, ultimately, my take-home advice for anyone thinking of buying a home is: “do not feel pressured or rushed to do so on anybody’s timeline but yours”.
-Choose the path to success that fits you best.
Owning a home today has come to appear like the real apex of success, at least to some of us. As a young person, you are expected to finish schooling, secure a well-paying job, and then acquire assets/properties, most importantly a home. Let me share with you the story of my first home acquisition (which I made before I was ready) and where it got me.
Do not get me wrong, it is great to own a home, but wrong timing and lack of preparation can cause significant problems.
So, sometimes in 2009, after my schooling, I got a job from which I earned a hundred thousand naira monthly. This seemed too good to be true for me at the time, because I had no prior experience. Well, they say miracles do happen, I guess I believed in one. After my first six months on the job, I had rented a well-furnished accommodation, and my lifestyle was quite comfortable. I took good care of my parents and siblings back at home too. All of these were the fundamental definition of success for a young person in Nigeria. But I wanted to do more; I wanted to build wealth, I wanted to own a home, and I felt the time was right. This was the moment that completely redefined my relationship with money.
The real estate agent I got to help me source for a property in Lagos warned me that I was not ready to buy a home. I ignored him, thinking he was not sharing my big dream of building wealth. Unknown to me, he was right. I laid out my finances to one of the property companies I could find and was told that my debt-to-income ratio was too high — I was viewed as a liability. This automatically would affect my ability to secure a loan.
According to growacorn.com:
“Your DTI is a percentage that compares your total monthly debt to your gross monthly income, and lenders use your DTI to determine your borrowing risk. To calculate your debt-to-income ratio, you must first add up your monthly debt payments, divide that number by your gross monthly income, and multiply that decimal by 100. Most loan providers in the real estate sector want borrowers to have a debt-to-income ratio below 36%. My personal debt-to-income ratio was higher than 45% at the time, which in the mortgage world is a red flag”.
What Did I Have To Do Next?
I soon realized that I had to improve my DTI by improving my finances, becoming debt-free and improving my overall lifestyle. This seemed easy to achieve — just get a higher paying job, save more and boom, gain access to a bigger loan and buy my dream home. Unfortunately, it did not turn out that easy; it took me another year to get a better job because I had to gain more experience to be qualified. When I eventually got the job, I had to start saving much more plus meet up with a new standard of living. All these took me approximately three years. The good news was that after all these extra efforts, I was finally deemed qualified for a bigger loan. And guess what? I got my dream home. I felt fulfilled as this was what I wanted for a long time.
The Reality Of My New Home Began To Set In
That period of joy, excitement and triumph only lasted for three weeks. This was the amount of time it took for my washing machine and the kitchen sink to start leaking. Being a homeowner was not only about paying the mortgage. I soon realized that every piece of my home upkeep was now up to me. This was my new reality, but this understanding came far too late and at a far too expensive cost. After just five months into my new home, my parents had to assist me financially in addition to my savings for the maintenance and repairs in my home. There were other expenses like sewage and sanitation fees, estate levies, security and so on. You could say I got things done one way or the other, but I was mentally exhausted. As I looked for a way out of this financial tight space, the only idea that came to mind was selling the home I worked so hard to get.
It was not until this moment I realized that I went into being a homeowner without an understanding of what it truly meant.
I failed to research the many costs that were involved in owning a home — from cleaning fees just after buying the home, to paperwork fees, to furnishing, levies, maintenance, sanitation, and insurance, just to name a few. I also found out there is a persistent lack of transparency about the ins and outs of buying and owning a home. It can be hard to see the realities of the experience when it is often viewed as an achievement.
I failed to educate myself before making such an important purchase.
While I still maintain that homeownership is a great way to build wealth, ultimately, my take-home advice for anyone thinking of buying a home is: “do not feel pressured or rushed to do so on anybody’s timeline but yours”.
-Choose the path to success that fits you best.