4 Tips for the First Time Home Buyer

When my apartment complex was sold a couple of months ago, I had a hunch I would need to move.

Lo and behold, a few weeks ago, I received official notice that our cluster of apartments would be taken off the rental market for good. Yes, I’d definitely be forced to relocate.

For the past eight years, I paid lower-than-market rent for my bungalow-style one-bedroom apartment. And yes, my low rent had allowed me to stash cash away into a savings account. But still – I panicked. I frantically started scouring online for apartment listings. As you probably guessed, rent in Los Angeles is super duper high, and the nice places get swooped up fast. Plus, all of the apartments comparable to mine were almost double my current rent.

Then a light bulb went off. Okay, maybe my partner suggested it. Perhaps I should consider buying my first house? As a single, female self-employed freelance writer who lives in the most unaffordable housing market in the U.S., I’m not exactly the obvious home buyer. With a sufficient down payment—we’re talking 20 percent here—it turns out my monthly mortgage, plus any HOA fees, would roughly equal my newly increased rent. I’m also a commitment-phobe. I’m the type of person who considers committing to a brand of eco-detergent a small victory.

Nonetheless, buying a first home isn’t a bad idea. Here are the steps I’m taking to prepare for homeownership:

Research

I’ll be zeroing in on the cost of homes in my preferred area. I’ll also poke around to gauge exactly the type of property I want. And as I get closer to actually making an offer, I’ll work on getting pre-qualified for a mortgage (yikes). Will I get an FHA loan or a conventional loan? How much will I qualify for? What are the conditions? So much to figure out.

Understand the costs involved

Boston-based financial planner Eric Roberge of Beyond Your Hammock makes an excellent point: when you’re leasing, your rent is your most expensive cost. But when you own your home, your mortgage is the absolute minimum you’ll pay. There are also taxes, insurance, and the cost of routine maintenance and repairs. When you buy a house, you also need to consider closing costs. In my case, I need to make sure I’m prepared to stomach all the expenses that come with owning my own place.

Leveling up

With any endeavor, my standard M.O. is to gradually level up. In other words, slowly invest in something, test things out, then reassess.

Case in point: when I took an interest in roller derby, I borrowed gear for six months before investing in my own set of skates. I’m currently practicing drums on a basic practice pad before buying an electronic drum kit. And as for the #freelancelife, I moonlighted as a copy editor and writer for several years before taking the leap to full-time status.

How will I gradually level up to buying a house? The long-term goal is to sock away a certain portion of my income each month. It’s an ambitious number, and I’ve automated my savings so that I can accomplish this. I’m also socking away any extra cash I get. My target amount for a down payment? At least 20 percent.

Saving money each month will also help me get into the habit of saving for maintenance and repairs, which is a big part of responsible homeownership. The general recommended amount? At least one percent of the purchase price. So, if I’m hunting for a $300,000 condo, this means I’ve got to have at least $3,000 saved up for repairs

Time to Get Real

As my fellow self-employed writer pals can attest to, working for yourself makes the home buying process more stressful.

For starters, there is more documentation required than if you worked a day job as an employee. Plus, it can be tougher to qualify for a mortgage if you don’t have a steady income. Indeed, I have a lot to think about. Plus, I have no clue what my life situation, needs and wants will look like in a few years. Will I be married, wanting to have a child? Will my freelance business be in a growth phase? Will alien bunnies take over the planet? As you can see, there are many unknowns.

At the same time, saving now and starting to explore the possibility of homeownership will get me in the proper mindset. In turn, I’ll be able to gauge if buying a house is truly the right choice for me. Here’s more good news: if it turns out that I don’t want to be a homeowner after all, I’ll have a healthy nest egg to funnel into something else. It’s important for me to get my ducks in a row—both mentally and financially. This way I’ll be prepared to buy a house if it turns out to be the right choice for me.

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