6 Important Tips for Buying a House on Your Own

Buying a house still continues to be a smart, long-term financial decision. And it’s not just for the happy couple who owns a Labrador and has a baby on the way. More single homebuyers are entering the market than ever before. In fact, a report from the National Association of REALTORS® found 24% of all homebuyers were single. Single females made up the second largest group of homebuyers, ahead of unmarried couples. Buying a house solo may seem a little daunting, but the good news is that process isn’t really different from any other type of homebuyer (like a couple for example). Single men or women can absolutely become homeowners, but there are just a few tips that you may want to carefully consider before taking the plunge. Bonus — these tips could be applicable even if you aren’t single.

1. Save for a down payment

For most home loans, a solid down payment is at least 5% of the loan amount, while 20% is ideal. However as a single homebuyer, you may want to consider putting down closer to that 20%. Doing so will allow you to avoid other fees, such as private mortgage insurance. And an increased down payment can help your mortgage payment be more manageable, or even increase your price range for a new home.

2. Reduce your debt

Before you buy a house, consider reducing all your debts as much as possible. Work towards paying down the balances on any student loans, car loans, credit cards, etc. Qualifying for a mortgage takes into account your debt-to-income (DTI) ratio, which is all your debts divided by your gross income. Typically, you’ll need a DTI that doesn’t exceed 43%. But when you’re buying your house alone, the smaller the percentage, the better.

3. Make sure your job is stable

One of the advantages of buying a house with another person is that if one of them were to lose their job, they have the other’s income to fall back on for a while. When you own your home solo, you want be sure that your job (and your income) are stable enough to consistently pay your mortgage payment and all your other recurring monthly debts. With that said, consider saving for an emergency cushion before buying, in case you were to ever fall on hard financial times.

4. Only buy what you can truly afford

How much you qualify for and how much you can comfortably afford for a house may be very different amounts. Think about being a little more conservative with your loan amount, since you’re the only one responsible for paying for it. When creating a budget, consider not just your obvious debts, but also your savings goals, grocery bills, cell phone payment, gym memberships, dining out, hobbies, etc. Make sure you’re leaving plenty of room to still live your normal lifestyle, while also easily paying your mortgage.

5. Consider all homeowner expenses.

Your monthly mortgage payment is comprised of four parts — principle, interest, taxes, and insurance (PITI).

Your principle and interest payment will never change, assuming you choose a fixed-rate mortgage. However, keep in mind that your lender has no control over taxes or insurance, and they may increase over the life of your loan. Additionally, if you chose not to put down 20%, you may also have private mortgage insurance included in your monthly payment as well. Don’t forget to also consider costs like HOA fees, utilities, moving expenses, updates, decor, and yard maintenance. There are a lot of costs that go into owning a home that may not be obvious, so don’t forget to take these unexpected costs into consideration. So as mentioned previously, it’s a good idea to be conservative with how much house you decide to buy.

6. Don't forget about the maintenance.

Similar to the above point, homeownership has a lot more responsibility than renting. Unfortunately, you can’t just call a landlord when something doesn’t work. Make sure that before you buy, you’re willing to maintain your new home. That could include bigger problems, like knowing what to do when you have plumbing issues (or knowing who to call). But don’t forget it also includes smaller tasks like mowing the lawn, replacing air filters, etc. Owning a home when you’re single is totally doable. If you’re ready to consider a transition from renter to owner, an Atlantic Bay mortgage banker can help you every step of the way.