NAR’s most recent profile of home buyers and sellers revealed that 19% of recent buyers were single women and 9% were single men. While solo homebuyers may face unique challenges, that doesn’t mean home ownership is out of reach.
Here are some tips for those who want to buy on their own.
Check your credit
Buying a home on your own means you must qualify for your mortgage based solely on your own income, finances, and credit history.
The Federal Trade Commission says you are entitled to a free copy of your credit report each year from each of the three national credit reporting companies. You can order your report online at annualcreditreport.com. Many banks and financial companies will also make your credit score available for free if you are an existing customer.
Once you have your report, read it carefully to make sure there are no errors. If something goes wrong, contact the credit reporting company immediately.
Be realistic about your budget
If you’re taking out a mortgage on your own, it’s important to carefully consider your monthly expenses and set a realistic budget. Some financial advisors advise spending no more than 30% of your pre-tax income on housing, while others, like financial guru Dave Ramsey, suggest 25% as the maximum.
When analyzing the numbers, remember that in addition to your mortgage, you will also be responsible for property taxes and home insurance. And, if your down payment is less than 20%, you will also have mortgage insurance.
Remember that lenders look at your gross income and monthly debt, but are not aware of other expenses like daycare, car insurance, medical bills, restaurant meals, vacations, etc From the lender’s perspective, it may seem like you can afford a certain amount, but you really need to spend a lot less to keep your personal finances healthy.
“You also need to consider general property costs such as updates, repairs and routine maintenance, as well as things like utilities, snow removal, lawn care, etc.” , said real estate agent Wanda Williams of Century 21 Cedarwood. “And all owners should create an emergency fund. This is essential as it can provide a financial safety net when facing large and unexpected expenses.
Look for alternative loan programs
Saving for a down payment is consistently cited as the number one barrier to home ownership. The good news is that there are options available and it is possible to buy a home with less than the standard 20% down payment.
There are also several government-backed mortgage programs that accept low down payments. The Federal Housing Administration (FHA) offers borrowers the opportunity to get into a home for as little as 3.5% down, and the United States Department of Agriculture (USDA) offers a no-down payment mortgage. eligible rural home buyers. There is also the Veterans Loan (VA) program, which allows qualified buyers to purchase a home with virtually no down payment and they can do so without the penalty of private mortgage insurance.
“You can also check out specialty programs like the Chenoa Fund, which offers down payment assistance products in conjunction with FHA-insured mortgages,” Williams said. “And MSHDA also offers a variety of products to help buyers become homeowners, including their down payment assistance programs that provide up to $7,500 in assistance.”
Rely on the experts
Being the sole owner of a home can seem daunting, but you don’t have to go it alone. Williams says connecting with a local realtor and lender is the best way to ensure success.
“I think the most important step for any buyer is to first meet with a local lender to go over the finances,” she said. “Be open and honest, ask questions, explore your options, set a comfortable budget, and get your pre-approval. Having this nailed down will make you feel confident to move forward with the rest of the process.
For a list of reputable local lenders and REALTORS®, visit the Greater Lansing Association of REALTORS® website at www.lansing-realestate.com.