Not having a “special someone” shouldn’t hold you back from your dream of owning a home, it just comes with some different considerations. But, as you may have learned when your best friend and their new spouse bought a house and then divorced, it’s not all that bad to only have yourself to consider.
Here are six tips to help you prepare for and purchase a house when you’re single, or just not ready to commit to signing on the dotted line with your significant other.
Since you’re buying a home on one income, coming up with a down payment can be tricky. Well before you plan to buy a home, make some changes to allow you to save a good chunk of money. Make your large purchasing decisions knowing that you may buy a house in the next year or two.
For example, you may want to rent an apartment with roommates for a while instead of living alone to reduce your current housing costs. Or, you may reduce what you contribute to retirement (but only for a short time!), ask your parents for cash in lieu of holiday gifts, or put off that annual trip to Vegas in order to build up your savings. The key is to make sure that money actually gets put in and stays in your savings account, rather than being reallocated to a different purchase.
Look into Alternative Options
You can get creative when you’re buying a home as a single person. Since you don’t have to consider someone else’s opinion or needs, this frees up a few options that may help you get into a home sooner.
For starters, check out the Federal Housing Administration (FHA) loans. Unlike traditional mortgages, where you have to put down 20% and have great credit, FHA loans typically require just 3.5% down and have competitive interest rates. A bonus of doing this as a single person is that you’re not risking another person’s credit score dragging up your interest rate.
Another innovative solution for owning your first home is house hacking. With this strategy, you purchase a home and rent it out while you live on the property with your tenants — ideally it is a multi-family home or has a walk-out basement. It’s perfect if you’re handy around the house, but aren’t able to afford mortgage payments.
House hacking can be especially effective if you’re willing to purchase a home that needs some cosmetic updates. Purchase for a low price, live in it with your tenants while you fix it up, then enjoy the space by yourself or sell it for a higher price and upgrade. Know many couples who would be willing to do this together? We didn’t think so.
If house hacking isn’t your jam, you can still consider finding roommates to help you pay the mortgage on your new home. Instead of living in an apartment with two of your best friends, ask them to live in your home and pay their rent to you instead of the complex.
Be aware of potential downsides to renting to your friends and have a good conversation prior to them moving in. It’s best to put a lease in place — not because you think things will turn ugly, but just to be sure everyone is on the same page with expectations. Who pays the gas and electric bill? Can they bring their dog? Are they allowed to use the garage? Make sure these questions are answered before things get awkward.
Get a Home Inspection
Always get a home inspection. We’ll say it again for the people in back — ALWAYS get a home inspection! There’s no other way to know what potential repairs you’ll need to make down the road. While a home’s price may be within your budget, anticipated repairs may not be.
Strive for Repairs Before Closing
If your home inspection does turn up some large ticket repairs, try to get these under control before closing on the home. This can be done by asking the seller to fix the defects, lowering your offering price, or asking the seller to pay more closing costs.
There are other creative ways to do this, like asking for certain furniture or appliances to stay that wouldn’t have otherwise. Either way, you’ll want to work with your real estate agent and take a look at your single income budget to make sure you won’t be in a pickle after closing.
Build Up Your Network
You’ll need trusted people on your side, both when buying a home and maintaining it after you’ve moved in. Ask around for referral for services like handypeople, plumbers, insurance agents, and electricians. And, just as you rely on these professionals, trust a local, trusted real estate agent to walk you through the process of buying a home on a single income.
Besides helping you uncover additional cost-savings opportunities, Clever Partner Agents also offer on-demand showings — sometimes in less than an hour — so you know you won’t miss out on your dream home. Plus, you’re eligible for a $1,000 Home Buyer’s Rebate on any home you purchase for more than $150,000 (in 40 states).