Hey, single ladies out there! Looking to buy your first home? Awesome! Homeownership is a major accomplishment, and if you can do it on your own, all the better.
Still, there are a few things you should be aware of before buying your first home. Below are some common traps to avoid as you go through the home buying process.
Wanting Your Dream Home Right Away
Buying a home is a serious financial commitment, and there can be so much pressure to get your dream home right away. But there’s nothing wrong with buying a starter home. Very few people stay their whole lives in the first house they buy.
It’s truly more important to get a home that you can afford rather than one that’s luxurious but stretches your budget too far. Plus, just because it’s a starter home doesn’t mean it can’t be beautiful and comfortable.
I live in an 1,100-square-foot home with my husband, two kids and one bad dog. However, by being smart about organizing and making sure everyone has their own space in our small starter home, we’re able to comfortably enjoy living here.
So, try to see past the ugly wallpaper or strange paint colors when shopping for your first home. Sometimes, if you can see past what other buyers can’t and see the potential in the home, you have a good shot at getting a great deal on your first place.
Having Too Small of a Down Payment
Most financial experts encourage first-time homebuyers to save 20% for a down payment on their first home. The reason is that most mortgage companies require you to have private mortgage insurance (PMI) if you don’t. This is an added monthly cost that you will incur on most mortgage types if you do not put down 20%.
To get the best mortgage rates and to avoid PMI, saving 20% down for a home is preferred. Plus, this means you enter into homeownership with a nice chunk of equity in your first home.
Focusing on the Monthly Payment Instead of the Total Cost
We live in a world full of monthly payments. Many people have monthly car payments, phone payments, utility payments, insurance payments and so on. It’s easy to think of your mortgage in terms of a month-to-month commitment. This is why many people say they want to buy a home because the monthly cost of their mortgage is lower than their current rent payments.
However, owning a home is much more than the amount you pay each month to your mortgage company. In my first week of homeownership, our hot water heater broke, our dishwasher broke and our electricity went out. Luckily, we were able to fix everything quickly, but it made us want to increase our emergency fund (cash was low because of our closing costs the week before).
So, go into homeownership prepared with a cash cushion and a firm understanding of your overall costs, interest rate and closing costs.
Waiving the Inspection
When you purchase a home, it’s customary to get a home inspection. That way, you can do a full walk-through of your home with the inspector to find anything that might need to be fixed.
Sometimes people think if they waive the inspection the seller is more likely to choose them as the buyer. However, this is a mistake because there could be significant (and expensive) problems hiding under your new home’s shiny surface.
We were able to get an additional $2,500 from our seller after the inspector noticed problems with our attic insulation. That’s money that we were able to put toward repairs after buying our home.
Remember, even if a home looks great from a cosmetic perspective, there could still be issues only an inspector can find.
Ultimately, buying your first home requires a significant amount of planning, money and time. If you have a strong income, a good down payment and a solid credit history, you could be well on your way to homeownership.
Are you a single woman interested in buying a home? What are some questions you have about the home buying process?
The post Hey Single Ladies, Avoid These 4 Traps When Buying Your First Home appeared first on ZING Blog by Quicken Loans.
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