Homeownership isn’t just for married couples. While renting is always an option, owning a home remains a priority for many people. Buying a new home is a complicated process for most buyers, but navigating the homebuying process as a single buyer can be especially challenging.
As a single buyer, it can take longer to save for a down payment on your own. Plus, mortgage lenders will need to rely on just one income and credit report to determine your eligibility. While it can be complex, that doesn’t mean solo homeownership is impossible!
Here are some things you need to consider if you’ll be jumping into homeownership on your own or on a single income.
Check your credit
Having a strong credit report is of even more importance since lenders will determine your loan eligibility based on your credit report alone. Review your credit report and make sure everything is accurate. Report any inaccuracies immediately since it takes some time for updates to appear. If your credit history could use some strengthening, use this time to improve your credit score. You’ll also want to avoid taking out any new lines of credit or making large purchases on credit. These are potential red flags that could delay your loan approval.
Get real about your budget
You must be honest about your finances. Take a long, hard look at your monthly expenses and spending patterns to determine if you can realistically afford to purchase a home. You may need to cut back in some areas as you save for your down payment.
This financial examination goes for your home buying budget as well. There are more costs associated with homeownership than renting. The mortgage payment is just a part of the equation. You will also need to cover home insurance and property taxes (if it’s not already included with your mortgage payment), repairs and maintenance, and utilities. Home affordability calculators can provide an estimated budget. Review your budget to make sure you are able to manage these payments and find out how much you’re comfortable spending on your home.
Important to note: you may qualify for more than you’re comfortable spending. You don’t have to borrow the full amount you’re qualified for. Stick to the budget you’re comfortable with.
Get your emergency fund ready
Emergency funds are necessary for every homeowner but especially single homeowners who don’t have the luxury of relying on a partner’s income to cover unexpected costs. Six months of mortgage and living expenses is a good goal to achieve.
Explore mortgage options
Think you must have 20% for your down payment? Think again! Depending on the loan program you choose, you could get a mortgage with as little as 3.5% down. This is good news for buyers who may find it difficult to save the typical 20% otherwise.
Check with your lender for available loan programs. You may be able to get a conventional loan with as little as 3% down, but there are also government-insured loans with lower down payment requirements. FHA loans are popular with many first-time and single buyers because they have a minimum down payment of 3.5%. If you’re active or retired military, you may be eligible for a VA loan that doesn’t have a down payment requirement. Shop around for a mortgage to find the right option for your financial situation.
Figure out what you want
One of the benefits of buying a home by yourself is being able to buy the exact house you want. Think about what this home looks like: what features do you need? What features can you live without? This list of features will guide your home search.
As you’re looking at homes, make a plan for the future. Life is a moving target and circumstances always change. Consider what could happen if you get a new job out of state or find a partner. Is the home you’re considering flexible enough to fit a new addition to your life? Does it have a high resale value? Is there potential to turn the property into a rental? Think about these possibilities.
Draft a friend for support
You may be buying a home by yourself but that doesn’t mean you have to find the home by yourself. Bring along a trusted family member or friend as you tour homes. Choose someone who will be a voice of reason and keep you focused on your goal. It’s easy to get carried away by the excitement of achieving this major milestone but your decision must be based on facts and not emotions.
Buying a home as a single buyer can be daunting but is also incredibly rewarding. The more you understand the buying process and what you want in your new home, the better able you’ll be to successfully navigate the homebuying process.
Once you’re ready to buy a home, visit us at SummerHillHomes.com to learn more about our communities throughout the San Francisco Bay Area. We’re sure you’ll find the right community that suits your desires.