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Last updated on December 5th, 2022 at 10:06 pm
Homeownership is viewed as a dream of only the privileged, I know that my parents were friends who got married because they followed the American dream of homeownership and got together to start a financial partnership Their story of course was a success!
But according to an analysis of U.S. Census Bureau data, now the share of U.S. single homeowners is the highest in a century.
With the home prices rising, inventory being low, and stricter mortgage structure many wonder if the buying power that comes with a single income is enough.
If you are organized and take care of a few things homeownership is entirely possible.
Here are a few tips and advice from some of the best real estate and financial professionals in the country for a single person to buy a home within their budget.
Have a compulsory saving habit
Having one income to pay the bills is not a motivation for the lender to approve your loan, in case of a medical emergency or a reduction in income will affect the mortgage repayments.
If you have a substantial bank balance with funds for the initial down payment it would be a brownie.
Look out for government-insured loans
Government-insured loans are a good option as they have lower down payment requirements.
The mortgage program run by the Federal Housing Administration (FHA) requires only 3.5%, whereas a conventional mortgage requires a 20% down payment.
If you are a veteran then a VA Loan that is backed by the Department of Veterans Affairs can help you to get lower interest rates and does not require any down payment or monthly mortgage insurance premiums.
Start small
A single homeowner without a partner or children doesn’t require too much space.
A smaller home will result in a much lower mortgage and thereby will reduce all your costs and bills at the same time you already become a homeowner which will boost up your morale.
Improve your credit score
Before trying to seek a mortgage pay attention to your credit scores.
A lot of debts will make securing a mortgage impossible. You’ll need a credit score of around 600 for most loans, but a higher score will guarantee you lower interest rates.
In 2019 according to data from the Federal Reserve, 90% of mortgages were taken out by people with credit scores higher than 647, and 75% of mortgages were taken out by people with over 700 scores.
As payment history makes up one-third of your credit score the secret of raising your credit score is to pay off all significant outstanding debts and pay all your credit cards and bills on time.
Avoid big mortgages
Be extra cautious about the size of your monthly mortgage payments. Similarly, think twice before opting for an adjustable-rate mortgage (ARM). As ARM rate will change after the initial period, and it will get adjusted based on market indexes.
So the initially low ARM rate will shoot up and raise your overall monthly mortgage payment.
Consider a co-signer
If your credit is not impressive or any other issues interfere with your dream of owning a home, you may consider a co-purchaser to your mortgage, it helps you in getting a better loan option.
Let your dream house not boggle you down instead let it make you happy and proud.
Reference Source: Realtor.com
