Three Things To Consider When Buying A Home As A Single Person
Decades ago, people wouldn't buy a home until they were married due to social norms and legal restrictions. These days, more and more people are bucking tradition and choosing to purchase homes by themselves. In fact, research by the National Association of Realtors found 23 percent of first-time buyers were single women and 15 percent were single men. While a home is possibly the best investment you can make, here are three things you need to consider before taking the plunge.
Lenders May Be Hesitant to Approve Your Application
Qualifying for a home loan may pose a bit of a challenge when you're single. Lenders are all about minimizing risks as much as possible, which is why many of them prefer married couples (or having multiple people on the loan). Having two or more earners on the loan means, in their minds, there is less of a risk of default.
As the sole source of income, single people may be seen as riskier to lend money to. Lenders may be concerned there is a higher chance of default if something happens to the sole breadwinner. If the applicant has children, the lender may feel the person's costs are a lot higher than what may be reported on income/expense statements. For instance, kids require a lot of food and go through clothing at a fast pace, two costs that may not be accounted for.
Unfortunately, these hidden beliefs can lead to mortgage discrimination against single people. For instance, studies indicate single women are less likely to default on their loans but are more likely to be denied a mortgage or pay higher rates on their loans. You may have to work a little harder to get approved with good terms, which may involve putting up a bigger down payment, getting your debt-to-income ratio as low as possible, and bolstering your credit.
Home Maintenance is Your Sole Responsibility
The second thing you must consider when purchasing a home is, unless you plan on having roommates or a significant other living with you, repairs and maintenance fall on your shoulders and bank account. As a single-income household, you need to ensure you're making enough money to cover the cost of maintenance or you're handy enough to do at least some of the work to save money.
This is why it's important to bargain for concessions from the seller to fix any immediate problems with the home. For instance, if the inspection uncovered leaky pipes, getting the seller to fix those or contribute to the cost of repair can minimize the amount of maintenance you have to do on the home in the short term. It's also a good idea to get the seller to agree to pay the cost of warranties for appliances—at least for the first year—which will let you get professional help when something breaks down at little or no cost to you, at least until you can learn to make the repairs yourself.
Don't Forget Future Needs
When shopping for a home, it's important to also consider your future needs. You may be single now, but what happens when you meet the person of your dreams or have kids unexpectedly? Will there be enough room in the home for multiple people? Are the schools good enough to send your future children?
As a single person, you'll have a lot more options and opportunities available to you than someone who is married. It's important to consider where you want to be in 5 or 10 years and buy a home that meets your current and future needs.
For help finding the best homes for sale, contact a real estate agent.