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Career & Money 5 min

How I Bought a House in California as a Single Mom

Alice Tucker
single mom buying a home
Outline

1. Protect your credit score

2. Save money and invest it to prepare for a down payment

3. Focus on your career

4. Find a great team

5. Get pre-qualified

6. Search, search and search some more

7. Make an offer!

Moving is hard. The long days of packing all my stuff, loading it up, transporting it and then unpacking it in our new home become exhausting. During my moves from apartment to apartment, I would dream of what it would be like to move into my own home. But there was a giant hurdle between me and that dream-- buying a home, as a single mother, in the beautiful yet expensive state of California.

I still can hardly believe it when I say this-- but I bought my own home, as a single mother at age 25. How can a single mom buy a house? It took years of hard work and careful financial planning, but I did it, and so can you.

I am sharing the seven steps I took before buying my first home. The first few steps can be started years before buying.

But don’t worry, if you are hoping to buy your first home soon, you can do it even if you haven’t been prepping for years!

1. Protect your credit score

Credit scores can feel mysterious. It is an ominous number that can often be ignored, but when it comes to buying a home, it is pivotal in determining what kind of home you can afford.

I began to track my credit score regularly through my banking app years before beginning the home buying process. I also took a class through my employers that taught me how to understand what is factored into my credit score. This helped me better manage it.

If you are considering buying a home, here are a few good things you can begin now to increase and protect your credit score.

  1. Learn about what goes into credit scores! A great resource for more information on credit score composition can be found at How are FICO Scores Calculated? | myFICO.
  2. Avoid high utilization of your credit cards - it is best to use about a third of your credit limit in a month.
  3. Make payments on time whenever possible! Consider starting a calendar or planner to track when payments are due, or consider setting up an automatic payment.
  4. Avoid applying for new credit lines except when necessary. This includes new credit cards, store cards, car loans, or financing big purchases. 

2. Save money and invest it to prepare for a down payment

Come up with a budget and savings plan, then stick to it! I began saving in high school, and I invested it in mutual funds. I continued to save away as much as I could after I graduated college, and that money became my down payment. Sometimes it wasn’t much, but it was consistent.

If you haven’t saved up money in the past, you can start at any time. You may feel discouraged by student loans or other debt or expenses that make it hard to save. If you have multiple outstanding debts, start by focusing on paying off the one with the highest interest rate while still making payments on the other debts.

A common misconception is that a down payment needs to be 20% of the home value. This is not true at all! According to Investopedia, first-time homebuyers put down an average of only 7% down.

There are several types of loans apart from a conventional lone that can help lower the down payment to as low as 3.5% - including FHA loans. See Investopedia FHA Loans for additional information and talk to your mortgage officer if you think this might work for you.

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3. Focus on your career

While I originally dreamed of buying my own home by the time my daughter was born, it wasn’t feasible as a freshly graduated, 21-year-old. I had to wait a few years while saving and growing my income. I dove into my work and dedicated all my efforts to being the best employee I could be. This resulted in a couple of promotions for me, increasing my ability to apply for a home loan.

Salary is a key metric used in calculating how much someone can borrow and at what interest rate. But it alone does not determine your loan amount, so it is impossible to calculate your loan amount based on salary alone (The Mortgage Reports). Credit score and down payment are also key contributors.

It is a good rule of thumb for budgeting to try to keep monthly housing costs to a third of your total income, though this isn’t always feasible. If you already pay rent, this can be a good indicator for what you can comfortably pay.

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4. Find a great team

There are two key contributors to your home-buying team—your real estate agent (realtor) and your mortgage loan originator (or loan officer). I knew of a friend who worked in the real estate industry, but I had no idea in what way. She is the first person I reached out to when I wanted to start to look.

Turns out she was a mortgage loan originator, so she couldn’t show me to see houses, but she could start my financing process. She connected me with an excellent realtor, who began to show me houses.

A real estate agent is the member of your team who will take you to visit houses, provide insight into the local market, write and submit offers, and negotiate the deal for you through the whole buying process. They are experts in the house buying process and they will talk you through every step.

A mortgage loan originator is the expert in all things financing. They will help you get the best interest rate, collect all your financial documents, help you secure the loan you need and walk you through everything in between.

The key is to build your team with people you trust—and know that it’s okay to change your team if you feel they aren’t the best fit!

5. Get pre-qualified

After you find your team, it is time to get pre-qualified for a home loan. Prequalification is when you are reviewed by a mortgage lender to assess whether you will qualify for a home loan and the size of loan you qualify for. This will tell you the price of homes you can look at and afford. This will also be something you need if you put in an offer on a house!

The process will be done by your mortgage loan originator. They will collect lots of documents from you, including pay stubs, tax returns, W-2s, etc. They will help you with everything and it’s nothing to be intimidated by!

6. Search, search and search some more

The next step is the fun one - looking at homes! I looked for over 6 months to find the best home to fit our needs in my price range. It can take time, but sometimes this step can go very quickly!

Consider what you are looking for in a home—location, size of home, size of property, pool, garage, etc. I liked to focus on the things I couldn’t change, rather than the things I could change later. I chose to buy one of the ugliest homes in a nice neighborhood. I knew I couldn’t change the location later, but I could make improvements to the house for years to come.

Your realtor will alert you of houses in your area that fit your desired criteria and if you desire to see the houses, take you to tour them. Find the house that is best for you.

7. Make an offer!

Once you find the home you are looking for and it’s within your price range, it’s time to make an offer! You will work with your realtor to put together an offer that includes price, investigation period length, and any personal property you want to request they leave (for example a refrigerator or washer/dryer set). Then you wait—the hardest part in my opinion!

The sellers can either accept, reject or counter the offer. A counter is when they respond asking for a different price or terms. Once an offer is accepted, you enter a contract period where you can do a home inspection, the house will be appraised and you get all your financing finalized. Once this is all done, you will sign a mountain of documents and then get the keys!

A moment I will never forget is seeing my three-year-old daughter holding up a “SOLD” sign in front of our home. Providing her with a permanent home gave me so much joy.

It can seem impossible to afford a house on a single income or feel difficult to save up for the down payment, but I believe in you.

The home buying process can be stressful and seem unachievable. Especially if you are facing an unexpected pregnancy or if you’re a single mom. I understand the weight you feel to provide the best life you can for your child.

For me that meant finding a place she could call home for years to come. It can seem impossible to afford a house on a single income or feel difficult to save up for the down payment, but I believe in you.

If you want to buy a home one day, begin preparing now. Even if it’s a few years down the road, focus on building your career and protecting your credit score. When it comes time to look at homes, build your team and start the searching process! The perfect home to raise your kid in is out there—you just have to believe that it is possible and work for it.