Buying a house can be daunting. Saving up for a down payment, finding a home, navigating the closing costs, and then moving in can be overwhelming. Now, doing this all on your own, is challenging, but definitely possible.
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Buying a house can be daunting. Saving up for a down payment, finding a home, navigating the closing costs, and then moving in can be overwhelming. Now, doing this all on your own, is challenging, but definitely possible.
In 2016, I bought my first house as a newly-single person. The housing market was hot, and competition was strong! Luckily, I read some great resources and asked many questions, and eventually learned how to buy a house at age 24.
If you’re in the market for a house, and don’t know where to start, here are 5 lessons I learned about buying a house as a single person:
The first thing to do when looking for property is to get pre-approved for a mortgage. Naive, and inexperienced, I went to different banks looking for rates and then learned this hurts your credit score. I thought I was being smart by applying conventional wisdom and looking for quotes.
I didn’t know about mortgage brokers, or online sites like Smarter Loans. I didn’t know what fixed or variable rate meant, and the entire experience was a crash course about the mortgage industry. Now I know better.
When it comes to residential mortgages, you’ll need to decide if you want a fixed or variable rate.
A fixed rate is the same rate for a certain time period; usually 5 years.
A variable rate fluctuates but can offer a lower rate throughout the time period.
Though 5 years is the most common length for a mortgage, there are other options, ranging from 6 months to 10 years! This is why it’s important to know your goals, and understand your strategy.
Another element to note about mortgages is the rate. The majority of people want to get the lowest rate because it feels like a deal! However, there can be many conditions and penalties on each type of mortgage so if you “break your mortgage” or pay it off earlier, there may be extra fees. Look at the rate, length, penalties, and perks of your mortgage as a whole before signing on the dotted line.
No matter your relationship status, you need to be clear on your goals; especially if you’re buying a place. Ask yourself these questions to determine your goals!
1. How long do you want to live in the area?
2. Can you see yourself growing old in this house?
3. How is the neighbourhood changing?
When buying a home as a single person, you may want to consider if there is room for another person in this space down the time or if this is meant to be your bachelor/bachelorette pad.
Write down your 1 year, 3 years, and 5+ year goals and how your property fits into the picture. If you plan on moving within a couple of years, consider the implications of breaking a mortgage.
With any large decisions, you will have a rollercoaster of thoughts and emotions. In a relationship, you can bounce ideas off each other, but as a single person, you need to be your own sounding board sometimes.
Develop a system to help you analyse decisions independently. Some good tools are the following:
One of the perks of buying a home on your own is that you have the final decision. Want purple walls and orange carpet? It’s your choice, (but consider the resale value). In a partnership, you need to compromise and might not get everything you envision.
Buying a home on your own, requires a high level of organization. You need to scan through property listings, schedule site visits with your agent, coordinate the financing with your mortgage professional, hire a home inspector and contractors, and more!
Stay on top of everything with a dedicated folder, and use that for your property hunt, list your team members and their information (ie: lawyer, mortgage advisor, real estate agent, home inspector, and insurance provider). Keep your open houses organized by keeping your calendar up to date too!
If buying property is a dream for you, there are many resources to help you navigate the journey. Ask friends and family who recently purchased a home. Mortgage rules, building codes and government regulations change semi-frequently so it’s important if you plan on becoming a home owner that you are up-to-date with the housing market.
Build a team you trust and use the resources they provide. Many home inspectors and real estate agents provide checklists, booklets, and resources to help you learn about the process. Take your time to stay informed on what to look for, and enjoy the journey toward home ownership!
