Duchess Digest: Single and Buying a House
By Jill Brown
Owning your own property is one of the fundamental, age-old pillars of the American dream. It’s the reason Europeans subjected themselves to indentured servitude, religious groups migrated across an uncharted ocean to colonize and generations of explorers expanded ever west. There’s something in our national psyche that has always championed the idea of owning your own place.
I’m entering the world of personal property ownership for the first time in my life, as a thirty-something single woman, and finding navigating the waters to be surprising. I consider myself to be well educated (college degree), with a good job (managing a marketing department) and decent savings (got to put away that 10% each month, ladies!). So when I ventured into the world of property ownership, I was surprised by how intimidating it still is for single women. Property ownership is definitely skewed in favor of men, or couples, but I say, to hell with that!
If I can do it, so can you! So here are three questions to answer for yourself if you would like to buy a place of your own.
1. How much rent am I paying now, and how much mortgage could I afford?
When you go to get pre-qualified, your mortgage person is going to ask for your income and your current rent. It’s important that you are not spending any more than 28% of your income on rent. This is an important figure regardless of your intentions for a mortgage. Rent (and a mortgage) can sink you fast if you get into a living situation you can’t afford. The mortgage you qualify for will only be for a loan amount that goes as high as a monthly payment of 28% of your income. So take some time to figure this number out ahead of time to get a realistic amount. And don’t forget…
2. What are the other expenses that go into a mortgage payment?
Your monthly payment won’t just include the mortgage… No ladies, that 28% will include several other monthly payments that are factored into the bill. You’ll need to account for property taxes on the home (annual taxes divided by 12 months of the year), property insurance and private mortgage insurance (if you’re putting down less that 20% of the home value at closing). So bear in mind that your total monthly payment will have a few other numbers riding on top of the mortgage loan amount.
3. How much can you afford to put down?
Closing costs can close down any single minded woman’s first time home dreams if she doesn’t prepare in advance. These fees, collected at the time of closing your loan, can be significant! For standard FHA loans (those are Federal Housing Authority loans, designed to help home buyers) closing costs include a down payment, which is 3.5% of the loan value (so on a $300,000 mortgage, that would mean $10,500 out of pocket, at the time of closing from you) plus any fees associated with the closing, called closing costs. These are for things like the home appraisal, document preparation fees and title insurance. These can add up to mean close to $5,000 or more at your time of closing – on top of the 3.5% down payment.
There are many factors to buying a home for yourself, but the rewards can be worth it! The important step is being prepared financially with savings that can cover these initial closing and down payment costs. In many cases, you can qualify for a mortgage that will get you a home with more space, for less money, than what you’re paying rent to live in now. That’s because mortgage interest rates are so low right now. For more info, visit Hud.gov.
If buying a home of your own is something you’ve always wanted to try, then answer the question above for yourself and stay tuned – I’ll be sharing more about the home buying process from my own perspective – as I take this exciting and huge journey for the first time as a Single Minded Woman.
Jill Brown is an Anchorage, Alaska based writer and blogger. She earned her Bachelors in Humanities and Sociology from USU and is the founder of “The Duchess Guide” a website dedicated to sharing the ups and downs of life in Alaska. For more on The Duchess Guide or Jill visit: http://theduchessguide.com/
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