About one of every five home buyers is a single woman, according to a study by the Joint Center for Housing Studies. That means if you're a single woman looking to buy a home, you're in good company. Still, the process can be an overwhelming one. Here are a few expert tips for buying your first home.
Evaluate Buying Versus Renting
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Do you feel homeownership is out of your reach? Before you dismiss the dream, sit down and crunch the numbers. Write down how much you are currently paying for rent, utilities, and any other costs associated with renting. You can even throw in numerical data points such as how much your weekly commute costs.
Once you have a full picture of how much it costs to rent, estimate how much it'll cost to own a home. Start with a home cost calculator and then customize the results to meet your situation. How big of a leap is homeownership, once all the numbers are on the table?
Determine How Much You Can Afford
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While buying a home is often cheaper than renting on a monthly basis, it's important to think about the long-term costs as well. Things such as homeowners insurance, utilities, and repairs can add up. Once you pay the closing costs on your home and start moving in, other expenses could arise. It's important to be prepared for things like appliances that need to be replaced or an unexpected leak in the bathroom.
If you determine your housing budget in advance, you could save yourself from getting in over your head. While it may technically be plausible to buy a bigger, fancier house, try to remember the other costs that could tack on top of your monthly mortgage. It's always better to make sure you're living within your means, so you don't end up in a situation you can't handle.
Check Your Credit Report
Once you've decided that homeownership is the right choice for you and have created a budget, one of the first things you'll need to do it check your credit report. Your credit report will provide you with a lot of information about your finances over the last few years. Each account you currently have or have had in the past few years can be seen on your credit report. Things such as credit cards, student loans, etc. will all be outlined here.
Your credit report will also highlight your payment activity on these accounts. If you were late on any payments, they would show up here. A mortgage lender will dive deep into your credit history, so don't be surprised if they ask you about a late payment you made three years ago (even if you have a high credit score). Make sure you know what's on your credit report, so you're prepared to discuss your payment and credit history with a mortgage lender.
Take a Homeownership Class
Buying a home can be a daunting task. It may seem your real estate agent and mortgage lender are speaking what sounds like a foreign language. Demystify your home purchase and ownership by taking a homeownership class. These classes will walk you through all the nuances of buying a home, from start to finish. In addition to covering important topics like the types of mortgage loans, the fees associated with buying a home, and how to get the most out of a home inspection, a homeownership class also will help you determine how much you can afford.
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Like many things in life, buying a home is a process of negotiation. Your real estate agent will help you through the process of viewing houses, choosing one that meets your needs, and making an offer to the seller. Often, a back-and-forth negotiation will ensue over the price of the house.
Remember that house price isn't the only bargaining chip you have. If you can't agree on a price, talk to your agent about negotiating other costs, like closing fees and fixes that were reported in your home inspection. When it comes to purchasing a home, you want not only the right house for you, but you want a price you can feel good about.
Simplify Your Payments
Once you have settled on a purchase agreement for your new house, look for ways to simplify your mortgage payments. One way to do this is to roll yearly costs, such as property tax payments and insurance, into your monthly mortgage payment. This will decrease the opportunity for a surprise tax bill at the end of the year or a lump-sum request from your insurance company. It is best to work with a tax professional to determine how to handle taxes in escrow best.
Buying a home can be an overwhelming process, but it is also one that can be easily managed by doing your homework. If you plan and make sure to stay within your budget, you'll be a homeowner in no time. Now, get out there and find that perfect house!