Buying a home is a significant accomplishment for anyone because the process takes planning, saving and a good credit score. For single women, becoming a homeowner can be an even greater accomplishment – but also more difficult when you’re relying on one income and one credit report.
To make the process as smooth as possible, here are 10 tips for single women looking to buy a home.
Check Your Credit Report
One of the first steps to prepare for homeownership is to check your credit report. Your credit report will show you a significant amount of financial information from the past few years.
Every account you have now or had in the past few years will be on your report. You should see student loans, credit card accounts, car loans and any other loans you might have.
Your credit report also shows if you paid these accounts on time or if you were late on any payments. If you have late marks on your account, mortgage lenders will likely ask you about them – I had one late payment on my credit report that was four years old. My mortgage lender asked me to explain what happened (it was an oversight on my part all those years ago!).
So, even if you have a high credit score and a near perfect history, prepare to explain any late payments.
Fix Adverse Accounts
Adverse accounts are anything negative that you see on your credit report. They’re usually in a separate section near the top of the report.
You might be surprised with what you see there – I once had the public library report me to collections for not returning a book. I had no idea they did that until I saw my credit report.
Adverse accounts damage your credit score and don’t look good to lenders. After all, they want to make sure you’re going to pay your mortgage on time each month, so having evidence of late payments or accounts in collections looks bad.
If you don’t have any adverse accounts, that’s great. If you do, go through them one at a time. Make sure they’re legitimate, call each lender or collections agency and try to get them removed or resolved before applying for a mortgage.
Determine Your Budget
Owning a house is a significant financial decision. It adds up to more than a mortgage payment. You have to consider home insurance, utilities and unexpected expenses.
Many potential homeowners think buying a home is cheaper than renting because they only consider the monthly payments. However, as a homeowner, you have to be prepared to fix issues as they come up.
The first week I moved in my first house, the dishwasher broke, the hot water heater broke and the electricity went out. So far (knock on wood), I haven’t had any issues since then, but it was a serious reality check.
Right after I bought my house, I was low on cash since I just paid closing costs. So, as a first time homeowner, I was scared when things started breaking. Luckily I repaired everything, but it was quite an initiation into homeownership!
That’s why determining your housing budget is so important ahead of time. Even if you can afford a nicer or bigger house, make sure to leave yourself lots of wiggle room for potential costly home issues.
Save for a Down Payment
Once you know your price point for your home (or even before), it’s time to start saving for a down payment. Ideally, you may want to save up 20% to use as a down payment to avoid private mortgage insurance. So, if you want to buy a $100,000 home, you should save $20,000 as a down payment.
Though saving this amount of money could take months or years, it might be worth the wait to get the home you want and a mortgage loan with the best terms and interest rates possible. There are also lower down payment options available if 20% is daunting!
Once you have a down payment, it’s time to get a preapproval. You should do this before you start shopping for a home so you’ll know what your realistic budget looks like.
When you get preapproved, you’ll give your financial information to a lender, who will then determine whether you’re eligible for a loan. As long as you’ve fixed adverse accounts on your credit report, have a high credit score and have a down payment, you should be on your way to qualifying for a mortgage.
Practice Your Mortgage Payment
Once you get preapproved, you should have an idea of what your future mortgage payment will be. As you shop around for houses, “practice” your mortgage payment. If your rent is $800, but your mortgage payment will be $1,200, practice paying $1,200 and put the difference in savings.
Research Neighborhoods and Real Estate Agents
It’s important to research neighborhoods and real estate agents. You want to choose a neighborhood that’s safe but also affordable. Try to determine the vibe of the neighborhood. Do you want to live somewhere with a young and lively crowd, or do you want a neighborhood filled with families?
When it comes to real estate agents, get recommendations from friends and family. You want a real estate agent with experience helping first-time single home buyers. You also want someone patient who will answer your questions and who won’t direct you to a home you can’t afford.
Bring a Trusted Friend or Family Member to House Hunt
House hunting can be a confusing process. For that reason, bringing a trusted friend or family member to house hunt with you can be helpful. Invite someone who has been a homeowner before to help you determine the best house for you.
Check and Double Check Before Closing
Once you make an offer on a house and it’s accepted, you’ll start to prepare for your closing. During this time, it’s highly recommended you consider a home inspection. A home inspection will show any potential issues with your home. If the home has issues, you can ask the sellers to make repairs so the home is in good condition when you buy it.
Make sure you send your down payment to the correct company. There’s been a rise in fraud lately when it comes to transferring money before closing on a home. Then, check and double check with your agent or lender. Make sure you’ve signed all the necessary documents and have all your financial ducks in a row.