Image courtesy of Flickr, Steve Wilson
Single homebuyers should consider these 6 tips to become better prepared for what lies ahead with home ownership.
Relationship trends have changed over the last couple decades, and that impacts the housing market in new ways. More single homebuyers are coming into the market than ever before and have different needs than couples and families.
While every house hunt is a personal, in general single buyers look for properties in central locations closer to the action, such as movies, shopping, and restaurants. For single women, security and safe transportation are an important concern as well. Finding these qualities is no easy task, especially when you only have a one income household. If you are considering buying a home on your own, here are six things to consider.
It's a simple question. Finding out your borrowing capability is the first stage of any successful home search. When you ask lenders for a loan, they will ask you for details of your income, debts and spending habits. Generally, lenders like for you to spend less than 38% of your income on all of your housing costs and payment expenses that appear on your credit report (also known as debt-to-income ratio). At this debt level, your expenditures are considered affordable. From the lenders perspective, you have a lower risk of losing your home due to missed payments if you have a lower debt-to-income (DTI) ratio.
Your monthly housing expenses don't just include the mortgage payment. Lenders factor in other unavoidable costs, such as property taxes, property insurance and mortgage insurance if applicable, which is an extra charge if you put down less than 20% of the purchase price at closing. This is also known as PITI (Principal, Interest, Taxes and Insurance). Keep in mind that you will have a number of fixed expenses as well, such as utilities, travel costs, internet charges, car payments, etc. It's important not to bite off more than you can chew.
A disadvantage to single living is that if any circumstances negatively affect your income, you are on your own. Losing a job, having a health issue or your car unexpectedly breaking down are some of the things that can affect your ability to cover your mortgage payment in the short or long term. This is why buying a home within your means is important. You should save enough money to cover at least 6 months of mortgage and housing expenses in case you run into financial trouble. When you have 6 months of expenses taken care of, you will have less stress and the ability to thoughtfully plan a strategy to get back on your feet. When you don't have savings to rely on, you will be more stressed and less able to carefully strategize a plan.
Single home owners will certainly be able to handle many DIY projects, but home ownership comes with more responsibility than most home buyers bargain for. From mowing the lawn to replacing a broken roof tile, projects will come up throughout the year that won't take care of themselves. You basically have three choices:
There are two aspects to safety that you should consider:
Both issues can be alleviated by choosing a home in a neighborhood with a low crime rate and friendly, resident neighbors who can keep an eye on your property when you are away, such as a neighborhood watch program. Let your real estate agent know that safety is important to you.
Buying a home is a great long-term investment, but if you need to move frequently with your job, or there's a chance that you might not be single in the near future, the property you are looking to buy may not be the ideal choice for the long term. Selecting a property with a spare bedroom that you can rent out, or one located in a family-friendly neighborhood will open up resale and leasing options for you should you need to move in a hurry for any given reason.
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