First, make sure you have saved enough for a down payment and for emergencies.
You should buy if you are planning to stay in the home for at least five years.
Homeownership costs include more than the mortgage payment.
Forget being homemakers—single women are now homebuyers.
Solo females began to outpace lone males in purchasing homes in the early 1990s. By 1999, single women represented about one in five total sales, buying homes at twice the level of single men, a proportion that has held roughly steady since, according to National Association of Realtors data.
“A lot of people, myself included, take pride in owning a home,” says Portland, Ore., lawyer Katie Abbott, 36. She bought a two-bedroom, 1,100-square-foot Craftsman this summer. “There’s no reason that it (homebuying) should be limited to only if you’re married,” she says.
Before you jump on this trend, take a few important steps to ensure the time is right for you. Buying a house is the biggest financial commitment most of us will make in a lifetime. A wrong move could haunt you for decades, but the right decision will make you a proud homeowner.
GET FINANCIALLY FIT
Save a big down payment. Many financial advisers recommend putting down at least 20 percent of the purchase price to make sure you can sell the house in the future, even if prices fall. “The less you put down, the greater the probability of being underwater (owing more than the value of the house) at some point,” says Eleanor Blayney, a consumer advocate for the Certified Financial Planner Board of Standards.
Take care of yourself. Before you acquire a major real estate asset, make sure you are contributing enough to a retirement fund, have six months of living expenses saved for emergencies and have purchased disability insurance—a must for single women, according to award-winning author and money manager Julie Jason, based in Stamford, Conn. “It’s not a simple decision of, ‘I like this house; let’s go buy it!’ The worst thing you can do is put all your money into a house and not put any money into retirement,” Jason says. “You’re deploying assets to make this purchase that you could be using for another purpose.”
Educate yourself. Shop around to find financial professionals you trust, including a real-estate agent and lender who are willing to answer all your questions and educate you about the transaction. Read all your mortgage documentation. Bone up on real estate basics, home repair, siding and roofs, garden care and home heating systems, even if you have to resort to books with the words “dummies” or “idiots” in the title.
MAKE SURE THE TIME IS RIGHT
Plan to stay in the home you buy for five or seven years. When you take out a mortgage, you pay closing fees, moving costs and other “friction” costs that can never be recovered. Make sure that the general area and the specific house will suit your needs long enough to make it worthwhile.
Consider what would change if you met a long-term partner. How long you would stay in a house depends in part on whether you remain single. Evaluate whether the property could accommodate two residents, or more if you might add children. Before Abbott bought her home, she had a structural engineer make sure she could build into the unfinished attic, which you currently enter through a ladder on the wraparound porch. “It’s a home that I could grow and expand into,” Abbott says.
Be sure your job and the local economy are stable. We all heard the horror stories of layoffs followed by foreclosures in the Great Recession. Be wary of buying a home if either your employer or the community is on shaky ground.
CALCULATE THE COSTS OF BUYING
Compare owning to renting. You can’t necessarily afford a mortgage payment that’s the same as your rent bill. There’s homeowners’ insurance and taxes to consider, and additional utilities and maintenance costs. Ask the existing homeowner what she pays for gas, electric, water, sewer, garbage removal and lawn maintenance. Remember extras like condo or neighborhood association fees. Build it into your budget. Ask colleagues and friends to recommend vendors who can help you keep the house in shape.
Consider moving costs. At a minimum, you’ll spend time away from work and shell out for packing supplies. Then you’ll need money to fix up and furnish your new home. Abbott set aside $20,000 for moving, painting, and furnishing her new guest bedroom and dining room.
Keep in mind you’ll be in charge of long-term repairs. During your home inspection, ask the inspector to explain everything that will need to be replaced or repaired, and make sure you know the age of each major system in the house. That will form the basis of your to-do list for the coming decade. “The biggest mistake people make when they buy a home is not to consider the non-routine expenses,” says Jason. “You’re probably doing one major project a year.”
USA TODAY Modern Woman magazine contains articles about lifestyle, health, relationships, money, home, travel and more. Find it on magazines newsstands or at modernwoman.usatoday.com.(Photo: Cover photo by Robert Erdmann/August)
WAYS TO START SAVING TODAY
It’s a big task to save up 20 percent of the purchase price of a home. Consider these ways to make it easier.
•Set up an automatic, recurring transfer from your checking account to a savings account. If you never see the money, you won’t spend it.
•Limit eating out and clothes shopping.
•Switch from pay services to free ones, and save the difference. For instance, ditch the gym membership for running and biking trails. Cancel cable and instead watch free television online or borrow from the library.
•Sell old clothes, books, music and belongings that you no longer use. Have a rummage sale or sell them online. As a bonus, you’ll have less stuff to pack and move.
•Negotiate better rates for services such as insurance, banking and your phone bill. You never know what you can get unless you ask!
•Take a second job or start a side-business. If you tutor kids in the evenings or walk dogs, all that money can go into your house fund.
•Live with your relatives—just for a while. Make sure it’s limited, and invite them to your housewarming party when you move.
This article is excerpted from USA TODAY Modern Woman magazine, which contains articles about lifestyle, health, relationships, money, home, travel and more. Find it on magazines newsstands or at modernwoman.usatoday.com.
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