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The single person's complete guide to buying your own home
Do you dream of having a home of your own? With nearly half of all new home buyers being single, you're in good company. But how do you go about finding the right place and actually purchasing it? What do you, as a single person, need to know? In Buying a Home When You're Single, Donna Albrecht demystifies the home-buying process and takes you step by step through the entire process of acquiring the home of your ...
The single person's complete guide to buying your own home
Do you dream of having a home of your own? With nearly half of all new home buyers being single, you're in good company. But how do you go about finding the right place and actually purchasing it? What do you, as a single person, need to know? In Buying a Home When You're Single, Donna Albrecht demystifies the home-buying process and takes you step by step through the entire process of acquiring the home of your dreams—from hiring a real estate agent to closing the deal. Whether you envision yourself in a palatial mansion or a modest condo, co-op, or manufactured home, here's your guide to making your dream come true!
* Learn how mortgages work and how to choose the best one for you
* Secure financing to fit your earning power
* Find specific help for first-timers
* Mine the Internet's rich real estate information
* Evaluate housing choices including co-ops, condos, single-family dwellings, manufactured homes, and others
* Negotiate the best price on a home
* Improve your investment after your purchase
Note: The Figures and/or Tables mentioned in this chapter do not appear on the web.
When you think of buying a home, what do you visualize? A traditional home on a tree-shaded lane? A condominium high above the street noises with a balcony overlooking twinkling city lights? Maybe you want a town house in a planned neighborhood with lots of built-in recreation.
When you buy a home, you are buying more than shelter. You are also buying a lifestyle. Like the clothes you wear and the car you drive, your home will say a lot about how you see yourself. At the same time, it will define some of the opportunities available to you. For instance, it will determine the kinds of recreation, shopping, and social life you will enjoy there.
There are also trade-offs to consider. If you work in an urban area, maybe you believe you can only afford a small condo or co-op but you want more living space. Here the trade-off might be considering a longer commute to work in order to buy a larger or nicer home.Change Your Home and Your Lifestyle
In Lexington, Kentucky, Stephen Risner admits that for the first few years after his divorce, buying a home for himself was not a priority. His work and his very active social life kept him as busy as he wanted to be. As manager of computer operations services for Ashland Oil, Inc., he had a comfortable lifestyle. Yet he couldn't quite ignore his friends' persistent advice that he should buy a home.
Along with that, Risner was discovering that he was not meeting the kind of people he was interested in by hanging out in bars. As he made decisions about how to change his lifestyle to something he would get more satisfaction from, he decided to buy a home. Risner chose a small "garden" home with lots of windows looking out to beautiful views. One part of the rental scene he had enjoyed was the amenities, so he was careful to buy a home in a development that provided a pool and tennis courts for residents.
While Risner admits that the social life in the development has not been quite what he expected, he is enjoying it nonetheless and he loves his home. Most of the residents are families and the community activities are designed for them, so other singles tend to stay away. If he were to do it again today, Risner thinks he would have asked his agent more questions about the single lifestyle at this development. However, he notes that the excellent location of his home does make it a very good investment, which was one point that he had stressed with his agent.
Risner mentions one unexpected, happy benefit of home ownership. Both his son and daughter have moved in with him while they go to college, and he is really enjoying this time with them.What Do You Want?
Before you rush out to look at open houses this weekend, first decide exactly what it is you want in a home.
Some features will be determined by your preferred lifestyle. If you entertain a lot, you may want a dining room, a big kitchen, and/ or a spacious, sunny patio. If you work at home, a comfortable office is a must. If your St. Bernard loves to dig, you need a yard.
On the other hand, some features you choose will be determined by your personal vision of your private life. Do you like to wake up with the sun streaming in your window? Do you want a home with a bay window for your Christmas tree? Do high ceilings make your spirit soar? Emotional choices have a real place in your home-buying decision, because choosing a home with the features that are important to you make the difference between living in a home and really being at home.
Whenever anyone asks what are the three most important things to remember when buying real estate, the answer is always "Location, location, location." Location is also one of the first things you need to consider when you are beginning to look for a home to buy. Use these questions to help you focus in on the kind of location that best suits you.
Since commuting longer each day than you are comfortable with will become a constant source of irritation, it can affect how much you enjoy your home. You may prefer to have two area perimeters: The first is for your preferred commute time, and the other is for the time and distance you may be willing to compromise for other desirable features.
If you are not already familiar with the communities you are considering buying in, talk with several sources about the character of different developments or neighborhoods. Obvious places to start would be with real estate agents. Surprisingly, even if you are not being transferred, relocation specialists (which many real estate offices have) are often willing to counsel you free in hopes you will later choose an agent from their office.
Another place to find other singles who may be able to give you insight is the library. If you are not familiar with the area, the librarian can refer you to organizations you may already be part of, such as Parents Without Partners, or tell you about active local groups you may never have heard of. The contact names you get are likely to be people who know a lot of other singles and can give you some ideas about neighborhoods where you are likely to find an active singles network.
If you are in the first group, you will probably enjoy living in an established neighborhood or a small town. Some newer communities are being built to what architects call "pedestrian scale," which simply means that they are designed to allow residents to handle many of their everyday needs without using a car.
If you are comfortable jumping into the car, you may want to look at suburban neighborhoods. If you are thinking about a rural lifestyle, you will need to accept the time it will take you to get to and from shopping and other activities.
Traditionally, homes near good-quality schools appreciate more quickly than similar homes that are not close to highly rated schools. The trick here is to check with real estate agents and the school district to see if the school is one that has good ratings and is attractive to incoming families.On the other hand, if having a lot of children living nearby bothers you, a home near a school can be less desirable.
By now you should have a pretty good idea of the environment you want for your new home. Enter your decisions on the Lifestyle Choices Worksheet at the end of the chapter. If you are considering buying a home with another single, each of you should study the questions just discussed and fill out separate worksheets. Then arrange a time when you can get together to compare your answers.
If you each have similar visions of the lifestyle you plan to lead, great! If not, you may want to spend more time talking about how you want to live before you go any further. You may even want to work with a counselor or real estate agent who can help you reach an acceptable compromise. If you cannot come to an agreement, you may want to reconsider whether you should buy with that person.
You can choose from many different kinds of housing. Along with the traditional single-family detached house, there are duets, town homes, condominiums, cooperatives (co-ops), and even factory-constructed homes (including manufactured homes, modular homes, kit homes, and log homes). Each has its own advantages and disadvantages. Some also come with community associations, which have their own benefits and problems. (See Chapter 3.)
Single-Family Detached This traditional home stands alone on a lot. On the plus side, you have a great deal of privacy and more control over your property than you are likely to have with the other housing forms. Unless there are community association restrictions, you can paint the house whatever color you like, add on rooms, knock down walls, and landscape to your personal tastes; the only power you answer to is your community's building permit department.
With no walls connecting your home to others, you are less likely to be bothered by your neighbor's activities. At the same time, you will be responsible for all the maintenance and upkeep inside and out, and when major repairs, such as roof replacement, have to be done, they are all yours too.
Condominium As a condominium owner, you will be buying your unit (as it is defined in the Condominium Plan for your development) as well as a proportional interest in all the common areas in the development. While many people believe the term "condominium" refers to an apartment-like attached home, that is not necessarily true.
"Condominium" is technically a type of interest in land involving specific characteristics including: common owner ship of the property; required membership in an association that controls the use of the commonly owned property; and adherence to the condominium's Covenants, Conditions, and Restrictions (CC& Rs).
A condominium development generally includes common areas ranging from walkways and utility rooms to pools. Luxurious condominiums may also have common areas for golf courses, equestrian trails, and clubhouses. All exterior maintenance is handled by the home owners' association.
You will be responsible to pay assessments to finance the maintenance of the common areas. Some CC& Rs may be written in a way that puts some restrictions on how you can use your home and has some impact on your lifestyle. (See Chapter 3.)
Town House While you may think of a town house as an attached home of two or more stories, this form of ownership is more a description of a housing style than a legal description of a type of ownership interest in land. Your town house may legally be a condominium, a unit or lot in a Planned Unit Development, or a single-family detached home.
Duets In some areas, this style of housing is called a duplex or half double. It is a construction of one building that incorporates two homes. Both units may be owned by the same person, or they may be sold separately.
Co-ops A cooperative (co-op) has a corporation that owns the entire project. The home units and all common facilities are included as a single property, and as the home owner you will own stock in the corporation. You receive the right to occupy a unit in the cooperative because you are a shareholder. One other factor that sets co-ops apart from condominiums is that the managing board of the co-op can control who buys each unit and can accept or reject you, as a buyer, for any reason.
Factory-Constructed Homes According to Bob West, president of the California Manufactured Housing Institute, the phrase "manufactured homes" is used to cover the spectrum of homes that are prebuilt in factories rather than stick-built (traditional construction techniques) on site. Often these homes are more affordable than traditional homes in the same community. In addition, they may be built in parklike communities or right on single-family lots. West notes that senior citizens— both single and married— often purchase manufactured homes, especially when they are looking for the lifestyle and community they can find in special manufactured home neighborhoods.
There are four common types of factory constructed homes: manufactured, modular, mobile, and panelized.
A manufactured home is a factory-built home that meets the National Manufactured Home Construction & Safety Standards set by the Department of Housing and Urban Development (HUD). These homes may be constructed entirely as one section, or as several sections that are joined together when they are installed on their site.
A modular home is a factory-built home of one or more sections that meets state and/ or local building codes where it is to be installed but does not necessarily meet HUD regulations.
A mobile home is a type of factory-constructed home that is built to voluntary industry standards— not a particular set of governmental regulations. The term "mobile home" is often a misnomer. The homes are rarely mobile once they are put on site. Many times they are clustered in parks that can offer social activities and a feeling of community while providing the degree of privacy often associated with single-family detached homes.
A panelized home is built to meet the building codes where it will be installed. Unlike modular homes that are shipped assembled, panelized homes are shipped as panels; for instance, a wall is shipped with windows, doors, wiring, and even exterior treatment in place and is ready to be joined with other panels at the building site.Just What She Wanted
Affordability was definitely a factor for Pauline Goodin when she purchased her manufactured home in Lakeland, Florida, but finances weren't the only consideration. Personal security was a major concern because now that her children were raised, she would be living in her new home alone. For Goodin, the answer was to choose a home in a park that had a special security patrol to watch out for the safety of the residents.
If you are interested in learning more about manufactured homes, how to purchase one, and how to find a member of the Manufactured Housing Institute, visit their Web site at www. mfghome. org.
This may seem like a strange question to ask in a book about buying a home, but it is something that you should ask yourself before signing on the dotted line. Your marital status has much less to do with your readiness to buy a home than your lifestyle does. A performer who always has to be ready to move where the work is is much less likely to be ready to buy a home than a teacher or a police officer who expects to stay in one community for many years. The local economy will also have some influence on whether you should buy right now.Are Homes in Your Area a Good Investment?
While home ownership offers income tax benefits, there can be financial reasons why buying a home, right here and right now, may be a mistake.
When a community's economy depends on one major industry that is having problems, a lot of attractively priced homes may be available. Unfortunately, until the area's economy is revitalized, it may be all but impossible to sell that home again at any price. If you know you will live in the area for a long time, these distressed properties may make excellent long-term investments.
If you think you may move on, it may be better to rent. Renting may be especially economical since distressed sellers may be willing to rent to you at very attractive rates. If you are considering buying for investment purposes, you may be able to achieve your financial goals by pursuing other investments with the income you would have spent on closing fees and higher monthly mortgage payments.How Will Home Ownership Affect Your Career Plans?
If you expect to move soon, then buying a home may have fewer or no financial advantages. (Of course, if your employer will pick up some of your selling expenses, buying is more likely to pay off.)
Depending on how quickly your house payments lower your mortgage balance and how quickly homes in your area are appreciating, normally you can expect it to take a few years to recoup the transaction expenses you incur when you buy and sell a home.
If you are questioning the purchase, you may want to talk with an accountant who can help you work out the numbers. Be sure your calculations take into account any income tax advantages you will have received during your anticipated ownership.Do You Really Want to Own a Home?
Don't buy just because all your friends are doing it or your family is pressuring you to settle down. If you are at a stage in your life where the freedom to pick up and move on short notice is important to you, or if you just do not have the time or energy to take on more responsibility, renting may be a better choice for now.
Looking back on her experience, Rachel Pollock of Denver realized that buying a home was not the best choice she could have made. On one hand, she was still mourning her mother's recent death (and the loss of "home" that represented). On the other hand, she was moving to Colorado to be near her young grandchildren who were encouraging her to have a place where they could come and visit.
Then Pollock saw the house. Actually, it was more like the study. She fell in love with a room that had beautiful built-in shelves and stained glass windows in the doors. She conveniently ignored the fact that this large home had four bedrooms and a yard that would require constant care. And she would be living there alone except for occasional overnight visits by her grandchildren.
The problems started almost immediately. First were the caretaking responsibilities. Pollock did not like dealing with growing grass and toilets that did not flush. A hailstorm damaged her roof— when she was out of town on business— forcing her to deal with insurance adjusters long distance.
Pollock also had violated the first rule of living in the suburbs. She depended on public transportation. Having grown up in New York City and lived in Boston, she was comfortable depending on public transportation to get her where she wanted to go, but her family did not share her feelings. Sometimes a grandchild would even duck out of the dining room during visits and look in the garage, hoping to find a new car. Then there was the quiet.
Pollock loves the energy that comes from living in an active, urban area. So when she went for walks at night on the dark, quiet streets of her neighborhood, it just felt wrong.
Finally she realized that the house owned her, not vice versa. So she sold the home and now blissfully lives in a rental situation. She admits that things may have worked out better if she originally had chosen a condo or town house where certain maintenance chores would have been taken care of. But, she says, on the balance, she she is happier not owning a property at this point in her life.
Before you can find a home you will love, you need to know what you really want. That sounds simple, but if you have not thought things through, you may be swayed by an attractive feature at one home and ignore the drawbacks until you are actually living with them.
Right about now you may be thinking that you don't really need to do all this. You'll know what you like when you see it. Maybe you will, but having thought through what you want and need can be a big help to your real estate agent— who in turn helps you.
In College Park, Maryland, technical writer Linnea Dodson advises, "My parents insisted that I look at open houses for two months before I got an agent and was ready to buy. At the time it seemed dumb, but at the end of two months I knew for sure what I had to have, what I merely wanted, and what I positively didn't want in my house. Then I walked into the agent's office with a typed list of 'I Must Have, ' 'I Would Like, ' and 'Do Not Show Me, ' which she appreciated. I think she took me much more seriously because of that."
A Home Isn't Always a House.
Home, Home on the Web.
Association by Gilt.
How Much Home Can You Afford?
All Home Loans Are Not Created Equal.
Special Help for First-Timers.
Be a Star--Get an Agent.
Something New--Or Tried and True?
Have I Got a Deal for You.
An Escrow Is Not a Large Bird.
After the Dance Is Over.
Congratulations, It's a Home!
Appendix I: Where to Find Special Buyer's Programs.
Appendix II: Amortization Tables.