If you’re thinking about going it solo with your first home, you aren’t alone. More women are buying homes now, more than ever before. No more waiting for marriage or the perfect time, women are leading the way in home ownership and so can you… but the first step is getting pre-approved.
Purchasing a home is a significant accomplishment for anyone. The process takes financial planning, the ability to save, and a good credit score. For women going it alone, buying a home is a great accomplishment but it can be more difficult when you’re relying on one income and one credit report.
To help you navigate the process, here are a few helpful tips.
determine your budget
Owning a home is a significant financial decision. But it’s not exactly like renting an apartment. There’s much more to it than just the mortgage payment. You’ll also need to calculate for additional expenses like home insurance, utilities, lawn care, and unexpected repairs.
Homeownership can be less expensive than renting but you want to make sure that you’re considering all costs involved and not just the monthly payment.
You don’t want to find yourself unprepared for unexpected costs. Even if you’re tempted by the amount the mortgage officer pre-approves you for, make sure to have reserves (after closing) for potential repair or improvement costs.
get comfortable with saving
Once you know how much you want to spend on your home, you’ll want to start saving (or allocating) money for your down payment and potential closings costs. Ideally, to avoid private mortgage insurance (PMI) you’ll want to save 20% for a down payment. For example, if your goal is to spend $100,000, you’ll want to save around $20,000.
If you’re financially savvy and have a great credit score, but saving this amount of money would take you a significant amount of time, there may be loan options available that require a lower down payment (consider FHA or first-time homebuyer loan programs), but you still want to be comfortable with saving.
Saving doesn’t have to be hard. Avoid the temptation to spend your stash, by creating a savings plan for yourself and rewarding yourself for each milestone you reach.
if needed, supplement your income
Don’t be afraid to get creative in creating additional income to save. You may have to take on a side hustle or temporary part-time job to generate extra funds for your down payment or closing expenses. Consider freelance gigs on sites like UpWork or Fiverr, or driving for Uber or Lyft in your off time, or even taking a course to learn Forex training or read this intro to cfd trading.
know your credit score
One of the first things you should do when preparing to buy a home is to check your credit reports – from all three major credit bureaus. Your credit report is like a financial summary of your credit accounts. It shows lenders if you’ve paid these accounts on time or if you were ever delinquent. But don’t think that having a high score exempts you from scrutiny. Even with a high credit score, you may still have to explain any late payments or overextended credit lines.
Once you’ve started saving for your down payment, you’ll want to meet with a lender. It’s important for you to have a strong understanding of how much home you can afford… and that you’re comfortable with. During the preapproval process, you’ll provide the loan officer with your financial information and they will determine your loan eligibility and help you to find the right loan program for you.
practice your payment
Once you’ve received your preapproval amount, you’ll have a good idea of what your future monthly mortgage payment will be. If the monthly payment is higher than your current rental payment, you’ll want to practice paying it each month. For example, if your rent is currently $975, and your projected mortgage payment is around $1250, start ‘practice’ paying this new amount by continuing to pay your rent but putting the difference between your current payment and your projected payment into savings. See how comfortable you are with this amount and know if you’re okay with borrowing for that much house, or if you need to consider a home that is less expensive.