Saturday, 27 May 2017

Living Single: Buying A House Without A Spouse

Written by Jaymi Naciri Posted On Thursday, 19 February 2015 20:25

Home purchases among single people are a growing trend, as buyers take advantage of low rates and available funds to transition from renting to homeownership.

And by and large, those singles are not men.

"A few decades ago, a single woman buying real estate on her own was a rarity. Before the Fair Housing Act of 1968, few women could get approved for a credit card, much less a mortgage, without a husband's or father's signature," said US News. "Now that's all changed. In fact, the National Association of Realtors reports that since the mid-1990s, single women have purchased homes at nearly twice the rate of single men. Last year, single female homeowners made up 18 percent of household composition in the association's Profile of Home Buyers and Sellers, compared to 10 percent for single men."

Think you're ready to take the leap?

"By educating and empowering themselves, single women have acquired a sense of homebuying confidence, making the dream of homeownership a reality," said the Shriver Report. "It's a process that doesn't necessarily begin with love first - unless it's for her dream house. She just needs a good real estate agent, an educated understanding of navigating the homebuying process, and a glass of champagne to celebrate after signing on the 50,000 dotted lines at closing."

Here are a few things to consider:

Make sure you have enough money to make the purchase

First-time buyers may be saving for a down payment and not thinking about the other costs of buying a house, like closing costs, which can add thousands of dollars that you pay upfront. Be prepared to come up with an additional 2–5 percent of the purchase price of your home to cover them.

If the upfront money is hard to come by, FrontDoor advises that down payment assistance may be available depending on where you live. Some states have affordable housing programs that that can provide "first-time homebuyers with $7,500," they said.

Make sure you can afford it monthly

Figure out the monthly payment of a house on any number of online mortgage calculators, and you might think it's far more affordable than it is, because you're only calculating principal and interest. Now factor in taxes, insurance, homeowner's association fees, and Private Mortgage Insurance if you're putting down less than 20 percent. This can add hundreds of dollars to your monthly payment. Even if you are approved by a lender, can you really swing it?

"Mortgage lenders may approve borrowers with good credit and other favorable factors for a home mortgage that—combined with their other regularly occurring debts—takes up one-third or more of the borrower's gross pay. However, experts caution it could be a mistake to borrow as big a home loan as a lender will approve."

Forbes recommends that the "home's principal, interest, taxes and insurance not exceed 28% of your net income," and Bankrate adds that "You should not have a mortgage that's so big you still don't put at least 10 percent of your income in a retirement plan."

Be realistic about your goals

If you're looking for pride of ownership and to improve your way of life, homeownership can be a great move. If your goal is fast cash, maybe not.

"It is a mistake to expect a quick run-up in property values," said Bankrate. But "Owning a home can help women enter a more secure retirement if they pay down their loan balance over time."

Don't be afraid to shop for mortgages

You might be loyal to a friend who is a loan officer, but it doesn't hurt to look around. Especially when "A Consumer Federation of America study in 2006 found that women received an outsized share of subprime mortgages," said Bankrate. "Mortgage lenders may not provide women with all loan information and options because of stereotypes about women's alleged lack of financial sophistication.

Have the loan officer lay out all the options."

They recommend "checking rates with several mortgage lenders, and don't simply select a lender based on a recommendation from a friend. A recent study "found women head of households pay 40 basis points—nearly 0.5 percent - more on home mortgages than other borrowers. The co-author of the study asserted that, "The cost variance is due to the fact that 41 percent of women say they relied on a recommendation, while only 25 percent of men did."

No matter which lender you go with, it's important to get pre-approved before you shop.

You want to know what you can afford before you fall in love with something that's way out of your budget. Being pre-approved will also mean you can move forward quickly when you find the right house instead of potentially losing out to another buyer who was better prepared.

See more tips for single women purchasing homes at the Shriver Report.

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  • Comment Link Tripp Thursday, 28 May 2015 18:12 posted by Tripp

    More and more people should buy as a long term investment and not wait for the wedding bells....protecting yourself in the long term by having an investment makes great financial sense.

  • Comment Link Deanna R. Jones Tuesday, 07 April 2015 23:38 posted by Deanna R. Jones

    Thanks for the advice. I'm buying a house on my own for the first time. The process seems pretty intimidating, but it really helps to know a thing or two about how to buy a nice house while I'm still single. It seems like a good idea to be willing to shop around for mortgages. I have enough money to pay for a mortgage to use to buy a house, so it seems like a good idea to see what I can find while I'm shopping around for a house.

  • Comment Link Troy Erickson Thursday, 26 February 2015 05:31 posted by Troy Erickson

    There are many people today who are waiting longer before they decide to marry. These people have gone to college, or started work immediately after high school, and by the time they are 25-30, have decent jobs and are ready to buy their own home. Many of these people are not married.

  • Comment Link Mark Dulhagen Sunday, 22 February 2015 04:49 posted by Mark Dulhagen

    Great article, I was just having this conversation with my cousin. She is convinced that she would never be able to buy a house on her own. I need to forward this to her.

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