How First-Time Buyers Can Unlock Hidden Assistance

First-time homebuyers should investigate available assistance programs and begin saving early, strategically planning their finances according to their timeline and individual circumstances to achieve homeownership.

• Investigate state and government assistance programs for first-time homebuyers.

• Start saving for a home early and align it with your personal financial order of operations.

• Ensure a fully funded emergency fund is in place before committing to homeownership.

First-time homebuyers often overlook valuable assistance programs offered by government and states, which can provide favorable lending or educational resources. Early and strategic saving is crucial, with financial planning needing to align with an individual's unique financial situation and timeline. It is essential to ensure a fully funded emergency fund is in place before pursuing homeownership to maintain financial stability.

Homebuyer Assistance Programs

• 00:00:00 First-time homebuyers should actively seek out assistance programs, as governments and states often incentivize homeownership through resources like favorable lending, classes on affordability, or specialized loans like VA or FHA loans. Resources like Nerd Wallet can help identify state-specific programs, which are designed to make homeownership accessible to more individuals.

Early Saving and Financial Planning

• 00:01:51 Starting to save early is a critical step for homeownership, as it integrates into a personal 'financial order of operations.' The earlier one begins planning and saving, the smoother and less difficult the process becomes. This approach makes the journey more manageable and less arduous over time, aligning with other long-term financial goals.

The 3D Financial Planning Model

• 00:03:05 Approaching big life decisions like homeownership with a '3D plan' involves considering a 'dream' scenario (saving 25% for a home), a 'down to earth' plan (temporarily reducing investment savings to 10-15% to acquire a home sooner), or a 'doo doo' plan (halting investments to urgently save for a move). The goal is to prepare adequately so that even an urgent plan does not lead to financial disruption or disaster.

Savings Allocation and Emergency Funds

• 00:05:03 Saving for a down payment is often a multi-year process and should effectively extend emergency reserves. For timelines within five years, savings should be held in cash for liquidity. However, for longer timelines (seven to ten years), investing funds in low-cost index funds or target retirement funds through an after-tax account may be appropriate, but a fully funded emergency fund (past step four of the financial order of operations) must be established before purchasing a home to protect against unforeseen circumstances.