You don’t have to be part of a couple to buy a house — but that doesn’t mean there aren’t pros and cons to going it alone!
What are things to consider when thinking about buying a home on your own?
They say there are four major stressors in life: getting married, facing the death of a loved one, preparing for a new baby, and buying a home. It makes sense that one of these major stressors is a financial transaction — buying a home often pairs emotions with money decisions, a potentially volatile concoction.
But when you’re buying a home for sale in San Diego, CA, or Miami, FL, as a solo effort, there are additional pressures and considerations to weigh before signing up for a 30-year mortgage. “People get so swept up in the romantic idea of buying a house that they forget all those niggling little responsibilities that come with it,” explains real estate investor Brian Davis.
But that doesn’t mean it’s not a worthwhile effort. After all, the home-buying process is as unique as the homebuyer — just ask Allison Mayer, who purchased a home for sale in Clinton, NJ (not far from New York, NY), by herself three years ago and has no regrets. “I had always had a goal to buy a place by the time I was 30 years old,” she says. “I was 33 or 34 when I bought my place. Better late than never!”
If you’ve ever paused while writing out your rent check to think about the equity you could be building if you were sending that cash to a mortgage lender instead of a landlord, you’re not alone. And in many cases, your mortgage payment is close to — or even less than — what you’re spending each month to rent. “I just was getting really aggravated with my rent money,” says Mayer. “My mortgage payment right now is quite comparable to what my rent was.”
Mayer took her time — almost three years — to save for a down payment, closing costs, and moving expenses. “Financially, it would be easier with a partner, but I can’t let that hold me back,” she says. Her patience really paid off. “The place that I bought was a short sale,” she says. “It was in an area I was really familiar with, near where I grew up. The money that I had saved was plenty for down payment, closing costs, and moving fees.”
A solo buyer doesn’t have the benefit of two incomes when it comes to qualifying for a mortgage. “A single woman may have a harder time qualifying than a married couple, since she is a sole earner, while a married couple may have two earners to raise their income,” explains Davis. “If the single woman has children, her expenses may be higher as well, which could affect her back-end income ratio.” But that’s not the full story.
New research from the Wharton School at University of Pennsylvania shows that single female buyers actually have higher rates of being denied for mortgages than single male buyers, in spite of data showing that those women borrowers default less often than their male counterparts (when all credit characteristics are the same). Pro tip: Don’t skip loan comparison-shopping, even if the first lender you meet with is ready to qualify you for a loan.
From saving that down payment to wading through the often-complicated real estate process, becoming a homeowner requires effort and dedication. Getting it all done by yourself? That’s an even bigger accomplishment — and choosing a great real estate agent and team of professionals is key. “I did it by myself, on my own,” says Mayer. “I never reached out for help. Things just fell into place. I had a great real estate agent who referred me to a great mortgage company.”
If you’re used to renting close to where you work, like Mayer, you might find you’re priced out of that area when you decide to buy. Or you might decide that moving a bit farther out is worth the commute because you get more for your money in the suburbs. “[I have] a very long commute; it’s nearly an hour,” says Mayer. “To buy a one-bedroom condo [near work] was around $200,000. I bought a two-bed, two-bath for $120,000. You get so much more for your money, and taxes are more affordable out here.”
In the three years Mayer has lived in her condo, she has redone both bathrooms, from plumbing to tile. Her next big project will be a kitchen makeover. But first, she’s taking on a slightly smaller one that she hopes will pay off this winter: She’s planning to install digital thermostats to save on energy costs, and she’s headed to YouTube for tutorials so she can do it all herself.
Taking on the responsibility for upkeep and repairs can be intimidating for any new homeowner. “Homeownership requires ongoing savings and a cash cushion, because it comes with occasional large costs,” says Davis. “Tomorrow, it may be a $2,000 furnace replacement. Next year, it may be a $5,000 roof replacement. Unlike renting, where the landlord is on the hook for these occasional but large costs, the homeowner needs to be fiscally responsible enough to have strong saving habits.”
“I know as a homeowner, if something’s wrong, that’s on you,” says Mayer. But, she adds, “I can’t let that prohibit me from moving forward.”
– See more at: https://www.trulia.com/blog/buying-a-home-on-your-own/#sthash.FuYPkbjv.dpuf