Record numbers of single women are buying homes on their own -- at last count, they made up around 22% of all homebuyers. But this group often has special concerns and fears about buying property.
For example, Diane, a graphic designer and yoga teacher in California, had wanted to buy a house for about five years. But she kept thinking the time wasn't quite right -- perhaps she should wait until she fell in love or started earning more.
"Finally," Diane says, "I got to realize, I can't wait forever for the right partner. And my income will always be irregular. I set myself the goal of owning a house before my 40th birthday."
Similarly, Jennifer, a 32-year old college instructor in Massachusetts, says, "I didn't want to live with roommates anymore, and I really wanted a space that reflected who I was. I think the major stressor was always financial, just being sure that I could make ends meet."
If you're a woman considering buying a home on your own, Diane and Jennifer's mix of eagerness and hesitation may sound familiar. Before buying, many women ask questions like:
- Will I be able to afford the mortgage and other costs on my own?
- Will I feel safe there?
- What kind of space will suit my present lifestyle?
- What if I get into a long-term relationship and have to move?
- How do I begin?
Here's how Diane, Jennifer, and other women have answered the questions above, and become savvy homebuyers -- as you can, too.
Be Realistic About What You Can Afford
There's no getting around the big dollars involved here -- median home prices are (as of this writing in 2010) around $150,000 to $250,000 (depending on region), and in many areas it's far higher than that. Even with the market slumping, this is still a lot of money, and prices are likely to rise eventually, if history is any indicator. And that purchase price doesn't include closing costs and ongoing costs like homeowners' insurance, property taxes, and maintenance. Here's how to go about determining what you can realistically afford.
Review your budget and housing options. Set your sights on something that won't break your monthly budget. Once you build some equity, you can move up.
Jennifer says, "In Massachusetts, there was no way that I could have afforded anything other than a condo." And although she was hoping to continue living in Watertown, the only condos she could afford there were one-bedroom units in high-rises. Jennifer decided to compromise on location, and found a beautiful two-bedroom place in a restored 1920s building in what her friends teasingly call "the suburbs."
Diane managed to find a tiny place in Berkeley. Its small square footage and overgrown backyard made it affordable for her.
Research monthly costs and hidden costs. When crunching the numbers, remember to factor in homeowners' insurance, property taxes, utilities, and home maintenance. Also nose around for any hidden future costs, like upcoming major repairs (such as a cracked foundation) or increases in community association dues (in a condo complex or other planned community).
Consider getting a mortgage broker. Working with a good mortgage broker, says Diane, "helped demystify the process, so I could wrap my mind around those high numbers." The broker can help you make the most of your one-person income, and deal with any blights on your credit score. (On the bright side, as a single buyer you won't be among the women whose boyfriend's lousy credit score hurts them when mortgage-shopping!)
Consider loans from family or friends. This is a great strategy to help pay for a portion of, or even the entire, house price. Here are some ways it can work:
- Agree on an interest rate that's lower than what you'd pay a bank, but higher than what your friend would receive from similar investments like CDs -- a win-win situation.
- Ask your friend or relative to help with the down payment, in return for a percentage of the appreciation when you sell.
- Borrow a smaller amount of money to help cover first-year expenses, like decorating and repairs.
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