Tips for buying a home on your own
Single women account for 16 percent of homebuyers, according to the National Association of Realtors.1 They are second only to families in their rate of homeownership and almost double the number of single men.
There’s good reason for single women (and men) to focus on real estate. Owning a home, while not a get-rich-quick scheme, can help build long-term wealth and secure your financial future.
By chipping away at a mortgage over many years and maintaining the property, you can secure an affordable place to live in retirement. And in the process you’re building equity that you can tap into later in life—something that can’t be said about renting.
With interest rates still low, it may be a good time to take the leap into homeownership. As such, single women should keep a few considerations in mind to make the most of their home-buying experience.
Move forth with confidence
Being careful with your money is important, but don’t let fear paralyze you from taking the responsible steps to realizing your dreams of homeownership. Prepare well, so you can be confident in your ability to meet your financial obligations.
Take your time saving up as big a down payment as you can. (If you put down 20 percent or more, for example, you’re more likely to have a smaller mortgage bill each month, and may not need to carry private mortgage insurance.)
Additionally, it’s always worth setting aside four to six months of mortgage payments in case of sudden financial hardship. Consider the counsel of a financial advisor to further understand ways to save and avoid excessive debt.
Buy less house than you can afford
Lenders may approve you for a mortgage payment that’s up to 40 percent of your income, but try to spend less so housing won’t strain the rest of your budget. Remember that mortgage is just one of your home-related expenses in addition to real estate taxes, property insurance, maintenance and perhaps homeowners’ association fees.
If your housing costs eat up only a quarter of your income vs. a third, they’ll be much easier to pay should you run into financial difficulties. To keep this budget item affordable, you may need to settle for a little less square footage or a condo instead of a freestanding house.
Shop around for a mortgage
Don’t assume that mortgage rates are uniform among lenders. Consider getting quotes from multiple lenders—not just the lender a friend or family member referred you to. Then compare the interest rates, in addition to the closing costs and fees. Alternately, enlist the help of a mortgage broker who can shop your application around to different lenders for the best rates and terms.
Make sure that the home you buy today as a single person will retain its resale value when you need to move. Your best bet is a well maintained home in a desirable neighborhood with a steady influx of new buyers.
Also, be aware of any prepayment penalties that your mortgage may carry. Prepayments are typically only in place for the first few years. You may want to consider renting out your property for a while in order to avoid this pesky fee.
Approaching your home-buying decision carefully may make your home a source of financial security for years to come.
1“2015 National Association of Realtors® Home Buyer and Seller Generational Trends.” National Association of Realtors®. March 2015. http://www.realtor.org/sites/default/files/reports/2015/2015-home-buyer-and-seller-generational-trends-2015-03-11.pdf