7 Things Single Female Home Buyers Need to Know

Young or old, rich or poor, single or married –people in all stages of life are looking to invest in a home instead ofthrowing away money on rent. And with women outnumbering men in highereducation and addressing the gender gap in salaries, it’s no wonder singlewomen are becoming a powerful force making up a significant chunk of the realestate market.

Despite low inventory, rising interest rates, and steadily increasing home prices, single female homebuyers make up 18 percent of all buyers, according to a 2018 report from the National Association of Realtors (NAR). For two years in a row, women were the second most common household buyer type behind married couples, which made up 63 percent. Single male buyers came in third, making up only 9 percent.

But what do single women getting into thehomebuying process need to know before meeting with builders, flipping throughlistings, and going to open houses?

Here are seven things single women need to beaware of and what it means for them to be leading in the market.

Why Single Women are Buying

On the whole, homeownership is on women’sminds: 73 percent of women say owning a home is a top priority to them, overgetting married (41 percent), and having children (31 percent), according to aBank of America 2018 Homebuyer Insights report. In contrast, only 65 percent ofmen said homeownership was at the top of their minds.

Who are these single women homebuyers? They’re not a homogenous bunch, according to research from the Joint Centre for Housing Studies.  They’re women of all ages, races, and income levels, single and never married, single moms, widows, and divorcees. Nearly half live alone already and another 30 percent are single mothers. Two-thirds were previously married – either divorced or separated, the research suggests.

Why are they moving? It’s a combination offactors, according to results from the 2016Home Shopper & Buyer Insights Study byBuilders Digital Experience (BDX). A majority of single female homebuyers (54percent) said home prices and interest rates were what triggered their urge tobuy, while increasing rent and more income were also at play in thedecision-making.

Save (Extra) and Get Your Credit in Order

As a single woman, you only have one income –your own – to make homeownership work. That single income will need to cover qualifyingfor a home loan, making a down payment, and making the monthly mortgagepayments.

The most important thing you can do with yourfinances as a single female buyer is save for your down payment and get yourcredit in order so you’ll be a responsible client to lenders.

Sixty-five percent of women said they’re saving for a down payment for their home, while another 49 percent said they’re consciously working on improving their credit score, according to a Bank of America report. Despite taking the initiative, 48 percent of women said they don’t have enough saved for a down payment and 47 percent said they wanted to have a higher salary before buying.

A 2017 Credit Sesame survey suggested that 42 percent of women said struggling to cover a down payment was the top reason they weren’t homeowners, compared to 38 percent of men.

As a general rule of thumb for conventionalmortgages, you should make a down payment of at least 5 percent. So, if you’rebuying a home for $200,000, you’ll need a minimum of $10,000 to secure a homeloan. However, 20 percent down is your best bet if you can afford it.

Check your credit report so you’ll know whatyour credit score is, and how you may appear to potential lenders – are youstaying on top of your monthly payments and are all of your accounts in theclear? If you see any glaring issues or adverse accounts, you’ll need toresolve them because you don’t have a partner’s good credit to balance out yourown.

While most homebuyers are shopping as a duo,you’ll make your case to lenders as a solo applicant so your salary, savings,and credit history will do all of the talking. You need to make sure yourfinancial house is in order.

Another option thatmay be available to you is to ask a family member, such as a parent, to act asa guarantor or co-signer.

What do You Qualify for … And What are You Willing to Spend?

Your next step is to speak with lenders, shopfor the best interest rates available to you, and feel out how much of amortgage you prequalify for. Not only does securing a prequalification lettershow you’re a worthy candidate, but it also lets you know how much you canborrow (and buy).

Single men tend to purchase more expensivehomes, with a median price of about $215,000, compared to single women, whotend to buy homes with a median price of about $189,000 – the lowest of allhousehold buyer types, according to the NAR report.

While the bank may pre-approve you for acertain amount, this isn’t necessarily the range you ought to be shoppingaround with. The bank crunches numbers and spits out this pre-approval figure,but it’s missing your personal financial vantage point, such as how much you’respending on other bills and discretionary items, or what your financial plansare in the long run.

Pace yourself and don’t jump into an expensivedream home right away when you should be entering the housing market with astarter home. The last thing you want to do is buy a house in the upper limitsof what you’ve qualified for and end up being house poor (pouring all of yourfinancial resources into your mortgage and running your home).

Instead, get incredibly familiar with yourbudget so you’ll know how exactly much house you can comfortably afford,factoring in your current and future lifestyle.

When determining how much homeownership willcost, don’t forget to account for the hidden costs that aren’t upfront but arerecurring, such as insurance, property taxes, and maintenance fees, which canadd up to a sizeable amount.

With a single income, you could quickly becomea slave to your mortgage with very little wiggle room. With this in mind,consider whether you’d like a fixed or variable rate mortgage, too.

Once you’ve decided on your sweet spot for yourmortgage, put it into practice: for a six-month period, budget with your incomeas if you’re paying for your upcoming mortgage, bills, and other expenses. Areyou living comfortably or just barely getting by? This is an exercise that couldgive you an honest read for what you can feasibly afford.

Dream Home Features

After considering how much you need to save andhow much of a loan you’re willing to take on, the next series of questions youshould ask yourself include:

• Will I feel safe here?
• Does this home fit into mylifestyle?
• How big of a home do I reallyneed?

With only a single pair of keys to the home,you’re calling the shots with your new household. This may be a key reason whysome women are getting onto the property ladder: 35 percent of single femaleshoppers said they were tired of their current home, triggering the hunt for anew place, according to the 2016Home Shopper & Buyer Insights Study byBuilders Digital Experience.

The BDX research suggests 30 percent of singlewomen buyers just wanted a place of their own, and 10 percent wanted a biggerspace.

Single women may be shopping for a few distinctfeatures though – namely safety, convenience and size of home.

Single women homebuyers are more likely than single men and married couples to buy condos over single-family detached homes, and they also “overwhelmingly prefer” two-bedroom homes over other buyers, according to statistics from the Joint Centre for Housing Studies (JCHS).

When it comes to location, they’re most likely to live in central cities, too, over the suburban life. According to the JCHS research, single women won’t compromise on a good neighbourhood close to amenities such as grocery stores, shopping, and fitness centres. They want to be in the thick of it and they’re willing to trade bigger homes for a better location.

Security is key, too – single women prefer safe neighborhoods or gated access. More safety measures you can take when searching for homes: avoid homes that bump up against dark alleys, of those with front doors hidden away from the street. Bookmark homes with entrance paths that are well-lit, drive-in garages with interior access into the house, and built-in alarm systems.

Factor in the Long Haul

Have an exit strategy in your back pocket asyou’re shopping for your new home in case your living situation changes. Youmay end up moving cities for a new job opportunity, change careers, or getmarried and start a family.

This could mean buying a home with rentalproperty potential so you can lease your condo, townhouse, or home if needed.If times get tough or you want to save on living expenses, you could evenconsider renting out a spare bedroom.

Choosing a good option for you now could alsomean buying a house with high resale value. You can also ensure your home isone that’ll be scooped up on the real estate market by choosing a home thatisn’t over-the-top expensive, close to good schools, and nearby greattransportation links. And, of course, maintain the home and yard so it’sattractive to potential future buyers. Finally, a new-build home is great, butdon’t go crazy with the customization if it’s not going to be your foreverhome. Super-niche features might detract from the home’s resale value.

Don’t get swallowed up in walk-in closets andopen-concept kitchens. Picking a home that’s built to last also involves doingyour due diligence in getting a full inspection to make sure the foundation andstructure are all intact. This step is worth every penny because experts couldpoint out any issues.

Beef Up Your Emergency Fund

All homeowners need to have a slush fund forwhen life takes an unexpected left turn, but an emergency fund is even morevital to single homeowners who don’t have a partner who can pick up the slackif, for example, they lose their jobs or go through a medical emergency.

There are also the unforeseen housing expenses,such as leaky pipes or a broken stove, that will crop up. You need to make sureyou have access to about six months’ worth of mortgage and living expensessaved up in a rainy day fund. Whenever you dip into this account, make sure toreplenish it, too.

Resiliency and Perseverance are Key

The journey to homeownership, whether you’rebuilding a new house or buying an existing home, is daunting. You’ll facebidding wars, home inspections that may result in deals falling through andother hiccups along the way – on your own. But remain calm, ride the wave ofups and downs and keep your eye on the price: in a Bank of America poll, 46percent of women said that homeownership made them feel responsible,independent (43 percent), and empowered (31 percent).

If you’re still unsure of the process, armyourself with information. Shop around between lenders and real estate agentsuntil you recruit the right team. Do your research on neighborhoods, collectcrime stats from the regional police, and visit open houses to get a feel forwhat you like. You can even sign up for first-time homebuying courses to getbetter acquainted with what’s ahead.

Finally, trust in the team you’ve built, too, from your builders to your mortgage broker, your family and friends and any other support you have around you. By the end of the process and after all of the decisions you’ve had to make, you’re bound to feel much more informed, accomplished and confident. Ready to begin looking? Head over to NewHomeSource for current local and international listings!