More and more single men and women are choosing to purchase a home of their own as a smart investment in their future. Here’s what you need to know to do it the right way…
The days of antiquated thinking that one should be married or otherwise attached to take the real estate plunge are long gone. Male or female, more buyers are realizing that real estate is a wise investment. But while the path to homeownership that eventually ends with one’s own set of keys is the same whether single or coupled, the route for singles comes with its own set of issues.
The down payment dilemma
One of the biggest challenges for any homebuyer is coming up with the cash for down payment, and that’s often tougher for those with just one income. According to a 2018 Zillow study, the typical single American needs almost 11 years to save up a suitable down payment, while married couples or partners can come up with a down payment in less than half the time.
However, the definition of a “suitable down payment” has changed in recent years. While 20 percent used to be the magic number in the wake of the financial crisis, today the median down payment for buyers younger than 37 was just 7 percent of the value of the house. And, for those who qualify, loans insured by the Federal Housing Administration (FHA) require just 3.5 percent.
Get real about expenses and what you can afford
What’s the best way to approach buying a home on your own? The same as for any other buyer: Review your current income and expenses and get a realistic assessment of what you can afford and how much of a monthly payment you’ll be able to make.
It’s also a good idea to subtract 5-10 percent of your take-home pay to allow for maintenance, repairs and unexpected home expenses. If you’re carrying any debt, now’s the time to focus on paying it off. Ideally, banks don’t like to see more than about a 30 percent debt-to-income ratio on a credit report. You should also talk to your bank or credit union about getting pre-approved for a mortgage.
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Start your search – and be flexible
Depending on your budget as a single buyer, you may also find that there are fewer affordable homes. Zillow research found that a typical single buyer can afford a home up to $176,100, less than the national median home value – which makes looking for your place in the sun a little tougher, but not impossible.
The garden home and townhome market are a great alternative to a single-family home – and they’re easier to leave and go since many complexes take care of lawn maintenance and other typical homeownership responsibilities. The experts at myHouseby can also help save you a lot of time, as well as help you identify the property types that best suit your lifestyle and budget.
Watch out for overspending
It’s tempting to look at the high end of the preapproval figures from the bank and think about that sweet little downtown bungalow. While the bank might say you’re qualified to spend that amount, actually affording that higher monthly payment is another story for day-to-day living – and doesn’t leave any wiggle room for unexpected expenses or potential remodeling projects.
Avoid the temptation to overspend – or jump at the first opportunity without thoroughly researching the market or deciding where you really want to live. That’s where myHouseby can help, as can the occasional gut/sanity check from a trusted friend, relative, or real estate professional.
Find out more
Considering your next home purchase? Check out the resources on myHouseby: We can help with your research, save you valuable time, and make it easier for you to discover and find the right home for your lifestyle.