In 2019, single females made up 18 percent of home buyers, surpassing single male home buyers by 9 percent, according to a study from the National Association of Realtors.
Compared to house-buying couples, single women face a difficult challenge when they decide to buy on their own. They need to qualify for home financing with a single income and credit score, and they have to make a huge financial decision on their own. These are the stories of two women who decided to take on the challenges of buying a home on their own.
“I needed a bigger space at the lowest price.” – Lori
Lori loved her one-bedroom downtown apartment, but she had one tiny problem. Namely, her parents in China – recently retired – now planned to visit their daughter regularly, staying for a few months each time.
After spending two months sharing her tiny space with them, she promised herself, “Next time, I will have someplace bigger.” At the time, she didn’t care how much she had to spend.
She was willing to shell out big money for some added privacy – a luxury she had grown to love since moving to the States nearly a decade earlier.
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Lori had no idea how the home-buying process worked, but she leveraged knowledgeable friends to help her understand everything from how realtors are paid to how a mortgage works and how to get approved. As she learned more, she became more excited about the possibility of buying.
Due to her high income and excellent credit, Lori obtained a mortgage pre-approval with ease. In fact, the bank approved her for a mortgage almost twice what she ultimately borrowed.
Most lenders will allow borrowers with excellent credit and low debt to spend up to 30 percent of their gross pay on a mortgage. However, buying near the top of the lending limit is risky for single buyers.
If Lori were to lose her job, she would have to draw down her savings to meet her mortgage payment (not to mention all the other costs of homeownership).
Lori realized that she really couldn’t afford as much as the banks were willing to lend.
“Buying is expensive. I could never really afford to pay the amount that they approved,” she said.
“I pay $300 month in HOA (homeowners' association) dues, $300 per month in taxes, $180 extra for downtown parking, and $100 more for utilities. That’s before I even pay my mortgage!”
With a mortgage pre-approval in hand and a realistic budget, Lori called up a recommended realtor and started her house hunt. Each time she visited a home, she took friends who served as sounding boards to discuss the pros and cons of each place. She backed out of a deal on a house that needed too much fixing.
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Lori waited a year to start house hunting again. The second time around, Lori knew exactly what she wanted. Within three days of searching with a good friend (and her visiting mom), Lori put an offer on a place next door to the house she considered a year earlier. Just a few weeks later, she called the townhouse her home.
Lori’s Top Tips for Buying as a Single Woman:
1. Don't Let The Bank Set Your Budget.
While couples are likely to have a second income to rely upon in the event of a job loss, single people need to prepare for those contingencies on their own. Lori recommends, “Don’t let the bank set your budget. Be realistic about what you can really afford on your own.”
2. Ask Trusted Friends for Input.
Talk through your thoughts before (and after) you put an offer on a house. Couples have a built-in discussion partner when it comes to buying a home, but single people need to make it a point to seek outside opinions.
“I wanted a home to build long-term equity.” – Megan
Unlike Lori, Megan wanted to buy a house for financial reasons. She wanted to build long-term equity in a home where she could also entertain friends and relax after a tough day of work.
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While Megan built a down payment, she started receiving market updates from her realtor. She wanted to wait for the spring selling season, but a well-maintained townhouse came on the market in February of 2013.
Megan brought both parents along to tour the home the day it was listed, and she knew that she wanted to call that place home.
Despite her parents urging her to think about it for a few days, Megan put in an offer that night.
A few weeks later, Megan signed the deed and received the key to her new home.
Although she could technically afford the house on her own, Megan lives with a roommate. This helps offset the cost of the mortgage.
Megan's Top Tips for Buying as a Single Woman:
1. Research Extensively.
More than 70 percent of homebuyers are couples. Lenders and realtors are unlikely to understand the complexity of buying as a single person. Megan believes that extensive research helped her feel happier and more confident with her decision to buy.
2. Get a Second Opinion.
Don’t make a decision to buy on your own before you get a second opinion. Although Megan didn’t follow her parents’ advice to wait, seeking their opinion allowed her to solidify her resolve to put an offer on her home.
3. Consider housemates.
Consider housemates to offset the mortgage costs. The income provided by a housemate allows Megan to enjoy both lower costs and the opportunity to build equity in a home that might be large enough for a husband and kids one day.