The Five Steps to Shopping for a Home

Buying a home is a process that can seem daunting and even a little scary to most first-time buyers. After all, being a homeowner is a huge financial and personal responsibility.

To make this lengthy process a bit more approachable, we’re going to break it down into five steps. While these five steps may be somewhat different for each person, depending on their own unique situation, they do comprise most home buyer’s experience.

If you’re interested in learning the steps you’ll need to take before owning your first home, read on.

Step 1: Know your long-term goals

Before you buy a home, you’ll want to have a clear understanding of what you, your spouse, and your family want from the next five or more years. You’ll want to make sure the area you’re moving to can provide things like career advancement and opportunity, good schools for your children, and so on.

These questions may seem obvious, but it’s an important conversation to have before making the long-term commitment of owning a home.

Step 2: Your budget and your needs

It might be tempting to hop online and start shopping for houses, but first you should get a clear idea of the size and cost of the house you’re looking for. This involves determining your budget, thinking about your credit and planning for your down payment.

Step 3: Mortgage pre-approval

Getting preapproved for a mortgage can be a great way to gauge the interest late and loan amount you’ll be approved for. You’ll need to gather paperwork, including income information (pay stubs), tax returns, and W-2 forms.

Be aware that lenders will run a detailed credit report. Since credit reports count as an inquiry, they can temporarily lower your credit score by a few points.

Applying to several lenders within a short period of time can make a significant impact on your score. However, it will start to rise again within a few months if you don’t open any new credit accounts or take out other loans.

Step 4: Get an agent

Real estate agents know the ins and outs of the home buying process better than anyone else. They’ll be able to guide you through the process and provide you with information that you can’t get anywhere else.

Step 5: Pick the right home for you

Now it’s time to start home shopping. However, before you begin, remember that getting approved for a loan doesn’t mean you must or should seek to spend the full amount on a home.

Plan for your needs, and keep the future in mind. Someday you might decide to upgrade, but in the meantime you can be building your credit and building equity in a smaller or more frugal home.

What To Expect When Buying A Home As An Unmarried Couple

Unmarried couples often find themselves surprised at the additional steps it takes to buy a home compared to their wedded friends.

This guide will help you prepare for buying a home together as an unmarried couple:

Banks will assess you differently than they would a married couple.

Whereas they look at a married couple as a single financial unit, you and your partner will be assessed individually. This certainly has its pro’s and con’s. Know that if one partner has a significantly lower credit score it can affect your eligibility for a loan as a couple.  

Legal ownership of the title will be different.

Unmarried couples have three options when it comes to title ownership: sole ownership, joint tenants and tenants in common.

Tenants in common is the most popular. The difference between tenants in common and joint tenants is this:

  • In a joint tenancy ownership is 50/50. If one partner were to become deceased, ownership of their half of the property would carry over to the other partner.

  • Tenants in common ownership can be disproportionate to reflect each partners level of investment.  If one partner were to become deceased, their living trust would inherit ownership of their portion of the property if another option is not otherwise specified in their will.

  • Sole ownership is just that. One partner owns full legal ownership of the property. This option can have tax benefits and increase your financing eligibility if one partner has a higher income or better credit score than the other.

It’s highly recommended for unmarried couples to sign a property, partnership or cohabitation agreement when buying a home together. This is a legal precaution to safeguard both partners in the future should anything happen.

If your finances are separate it is ideal to at the very least create a joint checking account from which to draw the down payment and mortgage installments. This is especially true if both partners are contributing to these payments. It create a clean, clearcut payment process each month.

Know each other’s finances.

Discuss your credit scores, debt burden, savings, investments and financial goals. Get clear on where you each stand and how these factors will influence your buying process. Create a budget together as a couple to ensure you can take on not just the responsibility of a mortgage payment but also closing costs, homeowners insurance, property taxes and maintenance costs. Plan for savings like retirement, nest egg, family planning, future vacations, and emergency funds.

Buying a home together as an unmarried couple is a different process than that of married couples. However, that doesn’t mean it has to be harder. With an understanding of what to expect ahead of time and a plan in place, the process can be a smooth one.

What You Need To Know About Buying A House When Single

Buying a home as a single individual comes with its own set of unique experiences and challenges. Some are to be expected, like financing with a single income. While others not so much, like a more competitive market.

You know that financing will be based on your sole income. However, the vast majority of homeowners are couples who have dual incomes. Your eligibility is going to be very different than that of a couple and for some home buyers when they receive a lower number this comes as a shock. Expect to see numbers that are on the lower side of those who apply as couples.

Since you are on a sole income you may want to look into various loan types such as those that offer low-interest rates and lower down payments. Two to look at are first-time buyers programs and FHA loans.

When comparing options watch the lenders fee in comparison to the interest rate. Where you may have low-interest rate it might come with a higher lender fee. Do the math on these ratios to get a true value of each.

Before applying for mortgage approval, clean up your budget and handle any existing debts, especially expensive ones. Pay off card balances, refinance student loans, and swap out expensive monthly car payments for one that is more reasonable.

Draw up a budget and get really clear on just how much house you can afford month to month. Include the cost of house ownership and maintenance in your budget in addition to the cost of future monthly mortgage payments.

As a sole earner having savings is incredibly important as you don’t have a second income to rely on. In addition to setting aside your down payment (as close to the recommended 20% as you can), build up a nest egg of three to six months worth income should anything misfortune arise.

Start the buying process well prepared with the right mindset. Smaller houses make up a lower percentage of the housing market and cheaper homes are competitive when it comes to the buying process. Be ready for a search that might go a little longer and a buying process that needs you to move a little faster than traditional ones.

Bring a trusted friend or family member with you to home viewings to have a sounding board for your decision process. It’s easier to get swept away emotionally when you don’t have a partner to hash out the gritty details with. Find someone who can come to each viewing with you so that you can compare the different homes pro’s and con’s together.

Buying a home as an individual is a unique process but it doesn’t have to be a difficult or lonely one. Ask for feedback from your realtor, bring a trusted friend and know what to expect from the buying process as a sole income earner.

Make Sure the House You Buy Has Security Features

One aspect of house hunting that some prospective home buyers overlook is security. Perhaps it’s because they’re looking at homes in “nice neighborhoods, where you shouldn’t have to worry about that sort of thing happening.” Maybe another reason they’re paying little or no attention to security issues is that they’re more preoccupied with the layout of the kitchen, the size of the backyard, and the condition of the master bathroom.

Even though there are dozens of details to compare and think about when you’re house hunting, security features are important enough to include in your checklist. By letting your real estate agent know that home security is a high priority for you, they’ll hopefully point out security features that they notice and perhaps ask the listing agent for any additional information on things like installed alarms systems, deadbolt locks, or security lighting on the property.

As a side note, if the present owner has recently installed an extensive security system in the house, you can also use that as an opportunity (excuse) to inquire about crime in the neighborhood and whether there have been any recent incidents in the area. Additional research may need to be done to ferret out that information.

As you check out different houses that your buyers’ agent shows you, here are a few security-related checkpoints to keep in mind:

  • Do the doors look solid and are they secured by deadbolt locks?
  • Do first-floor windows have functional and securely locking mechanisms?
  • Are there any outside floodlights, lamp posts, and/or other forms of illumination around the house?
  • Are there any overgrown bushes next to the house that could conceal a burglar’s attempt to enter the house through a window?
  • Are there any fences on the premises that might discourage a burglar from entering the property?
  • Do the main entrances have locking storm doors that provide an extra layer of security?
  • Are there any other security vulnerabilities that you or your real estate agent think need addressing, either now or in the immediate future?

While that list may not include every possible security feature and potential weakness to look for when touring homes for sale, it will hopefully heighten your awareness about the need to prioritize home security — even before you actually close on a house and move in.

When you do find the ultimate house for you and your family, it’s always a good idea to change the locks on all external doors as soon as possible. You never know how many duplicate keys have been circulated over the years to contractors, neighbors, cleaning people, pet sitters, house sitters, and family members. One way to take control of your new home’s security situation is to make sure there are no extra house keys floating around in the hands of people you don’t know.