Buying a home alone doesn’t have to be intimidating. Now, more singles than ever are taking this big step alone. To make sure that your home buying experience is successful, use these five tips for buying a home alone.
Have Good Credit
This really applies to any home buyer, but if you are the sole purchaser, then it is vital that you have excellent credit. One of the first things a lender will look at is your credit score. Borrowers with 760 or higher earn the best mortgage rates. You can view your score through your bank or Credit Card Company. If your credit score isn’t in the best shape, try paying down a few bills and make sure you are paying your bills on time. Within a few months, your credit score should improve. Also, avoid opening any new lines of credit.
25 Percent Goal
Some financial advisors say that spending 30 percent of your income on your monthly mortgage payment is fine, but try to aim at only spending 25 percent of your income on your housing payment. Being a homeowner involves spending money on more than just your mortgage payment, you will need to pay for home insurance, maintenance, taxes, etc. and that can be another 2-5 percent of your income. Aim to have a six-month cushion in your savings account – mortgage lenders will be impressed.
Get Your Documents Together
One of the most dreaded parts of applying for a home loan is filling out and submitting all of the paperwork. You’ll need the last two to three years of your tax return statements, your recent pay stubs, bank statements from the last 12 months and a letter from your employer confirming your employment. The review process can take anywhere from six weeks to a couple of months, so be patient.
The Bigger Down Payment, the Better
Prepare yourself to put down at least 15 percent, but if you can afford to put down 20-25 percent of the purchase price, that is even better. The more money you can put down, the more likely you are to qualify for a good interest rate on your mortgage.
Don’t Give Up
Be smart when it comes to finding your new home and don’t give up. Zero in on areas that you can afford. A great tip to determine how much home you can afford is to double your salary by two or two and a half. If your realtor is showing you homes outside of your budget, channel them back to the amount you can really afford – don’t fall into a trap and end up spending more than you can.
Are you buying a home alone? Connect with me for more information and guidance.