| October 5, 2016
In the past, home buying was typically associated with couples and families. Today, more and more single people, of all ages, are heading into homeownership. Aside from the economic benefits, like building equity in a tangible asset, many see it as an act of empowerment, an investment in themselves.
You may be wondering whether your housing dollars could be doing more for you by being applied to a mortgage rather than spent on rent. Here are some essential house-hunting tips to consider before heading out on your own.
- Prep your finances for scrutiny. Just like you do before you invite company over, clean, straighten, and fluff up whatever you can, financially speaking. Specifically, review your credit report before the lender does to ensure it’s accurate. This is something you can do for free through the Federal Trade Commission. Make sure you are current for at least the past six months on any outstanding debt.
- Know what you can afford to owe. While your Loan Officer will help you understand how much of a mortgage you prequalify for, think about how much you are comfortable owing. When a working couple applies for a loan, they have a back-up income should one of the members experience an income interruption. When you buy as a single person, you just have the one income source. So, if your earning capacity changes, you still need to be able to afford your payments.
- Understand how your after-tax expenses will change as a homeowner. Moving closer to work, your friends, and the places you frequent may save you money in terms of time and transportation costs. You may even be able to forgo a car. When buying a condo, however, you need to consider the added expense of the association fees to maintain the property. Homeownership and the expenses resulting from the type of home you own can drastically alter your budgeting needs. Be sure you are comfortable before you take the leap.
- Friends don’t let friends look alone. Looking for a home is like dating. Sometimes you just talk yourself into a relationship because you really want to be in one or just want someone to hang out with. Your friends and family keep you from making a mistake in those situations, and they will be just as honest if you bring them along when house hunting.
- Be realistic. Don’t try to force a purchase or take on more than you can handle. As attractive as tackling a fixer-upper is, it can be overwhelming when you are working full-time and on your own covering the unexpected expenses that typically ensue. To reduce the surprises in general—whether the home is old and in need of repair or brand new—try to have a home inspection as early as possible. During the inspection, ask as many questions of the expert you hire as you can to understand the types of problems you may be inheriting. It’s also a good policy to ask the seller for a warranty. That way if something does happen—the washing machine breaks down or the furnace goes on the fritz within months of closing—you have some financial protection.
- Think ahead. Consider how your life’s circumstances could change and try to buy something that can accommodate them. For instance, if there is a chance you might need to move for work in a few years, pay close attention to the factors that impact the future resale value, such as available parking, schools, and transportation.
Ultimately, be patient. The thing about home buying is that you’ll know when you find the right house. It’s the one that feels like you’ve just come home when you walk through the door.