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Help for Single Women Homebuyers

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What are all the single ladies doing? More and more of them are buying homes, outpacing single men. For the third year in a row, single women were the second largest group of homebuyers after married couples, according to the National Association of Realtors.

After all, women are better educated than ever before — more so than their male counterparts. According to U.S. Census Bureau figures, women held more associate, bachelor’s and master’s degrees than men in 2017. Women are also increasingly likely to play a major role in family finances. The Center for American Progress reports that, in 2015 — the last year for which this data was reported — 42% of American mothers were the primary or sole breadwinners in their home. Nearly a quarter of women (22.4%) were also co-breadwinners, bringing in between 25% and 49.9% of the family income.

Households led by women were more likely to own their homes than men, according to the U.S. Census Bureau. In 2016, almost half, 49.6% of single-female householders — including female householders with no husband present, one-person female householders, and and households headed by women with two or more people — owned their homes compared with 46.8% of single-male householders.

If you’re a single woman who is ready to purchase a home and lay down roots, now may be the perfect time to start your search. Mortgage interest rates are still near historical lows, and the requirements to qualify for a mortgage solo are not as steep as you may think.

This comprehensive guide will introduce you to home loans for single women and some of the best ways to get approved for a mortgage when you’re the only earner in your household. Whether you’re finally ready to buy a home or still thinking it through, keep reading to learn more.

Pros and cons of purchasing a home on your own

While there are myriad benefits to homeownership, not everyone wants to own a home. Many adults prefer a lifestyle with fewer commitments and more flexibility. Plus, there are financial implications to consider whenever you purchase a home of your own and not all women (or men) want that kind of responsibility.

Of course, the benefits of homeownership may outnumber the downsides. It all depends on the person and the type of lifestyle you want to have. With that in mind, here are some of the biggest pros and cons:

Advantages of homeownership for single women

  • Gain autonomy. New York City Certified Financial Planner (CFP) Kaya Ladejobi of New York City-based investment adviser Earn Into Wealth notes that the autonomy and freedom women gain through homeownership can be extremely empowering. Having the freedom to live how and where you want can help women stay in control of their lives and their futures.
  • Start building wealth. By purchasing a home, said Ladejobi, you can “have your housing dollars start working for you,” versus paying rent, which does nothing to build equity. By purchasing a property, you are making an investment that will hopefully increase in value.
  • Stop wasting money on rent. Many times, your monthly mortgage payment can be the same as what you’re paying in rent — or less. LendingTree’s Rent vs. Buy Calculator can help you determine which is a better bet in your area.
  • Gain more stability. Ladejobi said that homeownership is a great way to gain some stability in an often unstable rent environment. Your housing payment is likely your largest expense, and buying a home is a great way to take control. While your taxes and insurance costs may go up from time to time, Ladejobi said, the monthly payment on a fixed rate mortgage will remain fairly stable. And, when you buy, “you’re not at the mercy of rising rents or being priced out of where you live.”

Disadvantages of homeownership for single women

  • You may be financially vulnerable. While investing in real estate can be financially savvy, buying a home on your own can leave you in a tough position if you lose your job or your income drops. “There aren’t a ton of safety nets if you don’t have a partner to help pick up the bills,” said Ladejobi.
  • You may not qualify for the loan you want with one income. Having only one income can be limiting when it comes to qualifying for a mortgage. Since the amount of money you can borrow is dictated by your income and other factors, you may not be able to borrow as much as you wish you could and therefore not be able to afford that larger home.
  • You may have less flexibility. A home can be a smart investment, but home ownership makes your life a lot less flexible. If you want to move, for example, you’ll have to sell your house first or risk doubling up on housing payments. This is a big departure from renting where you can pack up and move with no questions asked any time your lease ends.
  • Buying a home is a huge financial commitment. In addition to coming up with a down payment and/or moving costs, there are additional financial considerations that come with buying a home. You’ll need to pay for upkeep and repairs, for example. If something breaks, it’s your job to fix it or pay someone to fix it for you.
  • You may have more responsibility. Owning a home comes with a lot of responsibility and chores not everyone wants. You will need to complete or outsource household work like mowing the grass, landscaping, and basic upkeep and maintenance, for example.

Getting approved for a mortgage on a single income

Getting approved as a single woman first-time homebuyer isn’t necessarily more difficult. However, the fact you have only one income will likely limit how much you can borrow.

However, Ladejobi says this is one area where you may just need to change your mindset. Your income may not be enough to qualify for your dream home, but you have to think about your home purchase in another way. “I think you have to understand that, if you’re a single woman, you may not need that much space,” she said. “You don’t have to buy your forever home on your first attempt.”

That change in mindset can absolutely help you qualify for a mortgage you want, she said, since a smaller mortgage for a smaller home is always going to be easier to afford. Here are some additional tips that can help you qualify for a home loan as a single buyer:

  • Look for a home below your means. Not only will borrowing less than the bank offers make it easier to qualify for a mortgage, but it will make it easier for you to save money and cover the costs of homeownership. “Looking for a place below your means also makes it so much easier to weather the storm if you lose income for any reason,” said Ladejobi.
  • Consider a multi-family property. You may also want to consider buying a multi-family property such as a duplex. When you buy a rental property, you can typically count a portion of the potential rental income to qualify for a mortgage. This could help you get into a better home. “It’s also a way to get started in real estate investing while you put a roof over your head,” said Ladejobi.
  • Improve your credit. Mortgage veteran Sandra Shaud said that improving your credit score is another way to get on a path toward the mortgage you want. You may only need a credit score of 580 to qualify for a Federal Housing Administration loan, but you usually need a score of 620 or higher to qualify for a conventional loan. Still, the lowest interest rates and loan terms go to those with FICO scores of 740 or higher. If you are able to improve your credit in the short term, you may qualify for a mortgage with a lower rate that will save you money.
  • Keep your debt-to-income ratio low. You typically need a debt-to-income ratio (your monthly gross income divided by your monthly financial obligations) of 43% or below to qualify for a mortgage. For that reason, you may want to start paying down unsecured debts like credit cards and car loans if you haven’t already.
  • Start strategizing for a down payment and moving costs. According to Kristi Nowrouzi, a loan officer based in central Florida, despite what people say, you don’t need a lot of money in the bank for a down payment. A lot of people don’t know they can borrow against their 401(k), get gift money from a family member, or withdraw from a retirement account like an IRA without taxes or penalties when buying a first home, though she noted that there are pros and cons to these practices. In lieu of those options, however, you will likely want to start saving money for a down payment and moving costs.

How to shop for a home loan as a single woman

Once your finances are in order, you’ll want to start shopping for a home loan that meets your needs. Here are some expert tips to consider as you navigate the process:

  • Start shopping online to gather information, but seek out a personal recommendation for a lender. The internet is a great place to gather information and research loan options, said Nowrouzi. However, you’ll probably want to work with a lender you trust when you actually apply for a loan — “ask for a referral from someone who has had a really great experience working with someone.”
  • Get your offer in writing. You can call mortgage lenders to shop interest rates on the phone, but those quotes don’t really mean anything, Nowrouzi said. “Get the offer in writing,” she said. “A lender cannot lock you into a rate until you’re under contract, and phone quotes don’t mean anything.”
  • Make sure to compare lender fees in addition to interest rate. In addition to interest rate, you’ll also want to compare lender fees such as underwriting fees, processing fees, points or partial points if you’re being charged any, and credit report fees. Ideally, you want to go with a lender that offers the lowest interest rate and fees.
  • Shop around or shop with a mortgage lender who can shop around for you. Shaud said that the best way to get the ideal home loan is to compare rates and fees with multiple lenders and banks. “You can go to a mortgage broker or a lender that can help you qualify for different types of loans with different lenders,” she said.
  • Never go to a single bank. Shaud said that individual banks may only have access to the loans they offer, and their options may be limiting. Not only that, but they may have specific rules that are more stringent than other banks. “If their specific guidelines are super strict, they may deny you when someone else might approve you,” said Shaud. “If one person tells you no, talk to someone else.”


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Protecting your real estate investment as a single woman

Buying a home as a single woman can be a financially savvy move, but what if you get in a serious relationship later on? At the end of the day, your home is an investment that you’ll want to protect and keep separate from your relationship — at least, unless you decide to get married and share all your assets with that person.

Real estate attorney Kristina Paulter of central Florida-based Cornerstone Law Firm suggests the following tips to protect your real estate investment regardless of your relationship status:

Get a prenuptial agreement.

If you purchase a home and build up considerable equity, then decide to get married later on, you may want to hire a lawyer to write a prenuptial agreement that keeps your home separate as a premarital asset. Provided you could get your new partner on board with signing this agreement, this would ensure the home and any equity remains yours in the event of divorce.

Do not put your partner on the deed of your home.

Putting your spouse or partner on the deed of your home means they now own half of the home, said Paulter. For that reason, Paulter never recommends this move. “The effect of adding someone to a deed when they are not on the mortgage is that you are essentially gifting them half of the value without any of the responsibility for the debt,” she said. “Additionally, the boyfriend will have to sign the deed in order to sell the property.”

Paulter asks you to imagine a scenario where a couple breaks up and, five years later, the woman wants to sell but has no idea where the boyfriend is. “It’s going to take a lot of time and money to get that issue resolved.”

Have your live-in partner sign a lease.

If you decide to let your partner live with you, you will likely want to draw up a formal lease. This lease will dictate the terms of their stay in your home and how much rent they will pay each month. According to Paulter, having a lease will make it much easier to kick your partner out if you break up since you would have the option of pursuing a formal eviction if they will not leave.

And no, having your partner pay rent would not entitle them to any of the equity in your home. “The only thing that would give them a right to the equity is if they are on the deed,” said Paulter.

Also, anyone living with you should do their part to help cover the bills — after all, you are not required to supply anyone with a free place to live.

Loan programs available to women

Single women homebuyers have access to the same mortgage programs as everyone else. The good news is, there are a wide range of mortgage loan programs to choose from, many of which can be fairly easy to qualify for provided you meet basic credit and income requirements. Programs for homebuyers to consider include:

  • Conventional mortgage: Single women homebuyers with good credit may want to consider a conventional mortgage. You typically need a debt-to-income ratio of 43% or less to qualify for a conventional mortgage, or a conforming loan that adheres to the guidelines set by Fannie Mae and Freddie Mac. You also need a credit score of at least 620, although the lowest rates and some of the longer loan terms go to those with credit score of 740 or higher.
  • FHA loan: FHA loans are available to consumers with credit scores as low as 580. You may be able to buy a home with this program with as little as 3.5% down.
  • HomeReady: HomeReady mortgages are available to consumers with credit scores of at least 620. They also let you put down as little as 3% of your home’s purchase price.
  • USDA loan: USDA loans are ideal for low and moderate-income buyers in rural areas. These loans don’t require a down payment, but there are income limits based on where you live.
  • VA loan: Military veterans, active military and military spouses may qualify for low-cost VA loans with no down payment and no mortgage insurance. These loans also come with no minimum credit score requirement.

Steps to becoming a homeowner

Buying a home can be stressful regardless of the circumstances, but doing it all on your own can add another layer of worry. However, this is exactly why you should lean on professionals for help through each step of the process.

According to Shaud, while you can shop for homes online, having an experienced real estate agent on your side can make a huge difference in your experience. Not only can they walk you through the process, but they can help you avoid common pitfalls and mistakes.

Meanwhile, you’ll also want to work with an experienced mortgage lender who can help you stay on track. Not only will they help you search for the best loan you can qualify for, but they can answer questions, give you solid homebuying advice and help you prepare for closing.

Regardless of whether you are working with a professional yet, you can still expect the same general timeline for your homebuying process. Follow these steps and you will give yourself the best chance for a smooth experience.

Step 1: Check your credit score and take steps to improve it.

Before you prepare to shop for a home a mortgage, Shaud said you should check your credit score. By doing so, you can find out whether your credit has room for improvement.

Still, you “don’t have to have perfection,” she said. You can have credit dings in your past, and you shouldn’t let them stop you from buying a house.

Step 2: Save for a down payment or moving costs.

While some mortgage programs require no down payment or a minimal down payment, you should still have some cash saved up for your home purchase over and beyond what you need to put down. After all, you will likely need to pay for moving costs and potentially setting up new utilities, cable and phone. If you’re buying a home that needs work, you’ll also need cash to pay for upgrades and repairs.

Also remember that a larger down payment is always a good thing, said Shaud. “You don’t need good credit or a huge down payment, but those things can help you qualify for a better loan with a lower payment and lower interest rate,” she said. “This can save you tens of thousands of dollars over the life of the loan.”

Having a down payment of 20% or more can also help you avoid paying private mortgage insurance, or PMI, on your home loan.

Step 3: Determine your housing budget.

You need to have a debt-to-income ratio of 43% or less to get a qualified mortgage, but Shaud says some mortgage programs allow a ratio of up to 50%. Either way, you can use this as a guideline to dictate how much you can afford.

If your gross monthly income is $5,000, for example, your total monthly financial obligations including your new mortgage payment, would need to be below $2,150 per month. To see how much your mortgage payment might be based on how much you want to borrow, you can play around with a mortgage calculator like this one.

Still, Shaud thinks that percentage may be pushing it for some homeowners. “I think that’s too high,” she said. “Spend less than that. You want to have a life, too.”

If you were able to keep your debt-to-income ratio below 35%, you would have more cash for other aspects of your life such as savings and vacations, she said. “You don’t want to overextend yourself.”

Step 4: Shop around to compare mortgage rates and terms.

The internet is a treasure trove when it comes to researching lenders, interest rates, and other mortgage details. You can read reviews of mortgage lenders and compare interest rates, fees, and different types of home loans.

Step 5: Get pre-qualified with a mortgage lender.

Once you’re ready to move forward, you’ll want to get pre-qualified for a mortgage. This step involves talking with a mortgage lender (either in-person, over the phone or online) and providing them with basic information on your credit and income. From there, the lender may be able to let you know how much you could potentially borrow and the interest rate you qualify for.

Step 6: Get preapproved for a mortgage.

While pre-qualifying for a mortgage is a solid first step to take, you will want to get preapproved for a mortgage once you decide on a lender. The preapproval process requires your lender to pull your credit and verify your income. At this point, your lender will be able to verify how much you can borrow and at what interest rate.

Step 7: Shop for a home and make an offer.

Once you have a preapproval letter from a mortgage lender, you’ll want to shop for a home with a licensed real estate agent. A real estate agent may have access to homes that aren’t even on the market yet, and they can help you see things you may not see while shopping on your own.

For example, a real estate agent may help you check zoning rules for properties near the one you’re looking at, Shaud noted. They may also know something about an area you don’t, such as the details on a construction project nearby that is starting soon.

Once you find a home you want to buy, your realtor will help you draft an offer that is fair and likely to be accepted. In the event you receive a counteroffer, they can advise you on the next steps forward — for example, you may want to accept the counteroffer or write another counteroffer of your own.

Step 8: Endure the mortgage process.

Once you write an offer on a home that is accepted, you still aren’t done yet. At this point, you will need to work with your mortgage lender to get your loan approved for closing.

Nowrouzi said this is one area where it really pays to be organized — your lender will want several months of bank statements and pay stubs and at least two years of W2s to prove your income, she said. If you have this paperwork gathered ahead of time, you can help expedite the process. You will also need to go through a home inspection during this phase, as well as an appraisal of the home to prove its value justifies the loan.

It’s possible your lender will need to verify more information as the process goes along. They may need newer bank statements or proof of where your down payment came from, for example. The faster you can get this information to them, the smoother your loan process will be.

Step 9: Close on your home.

The closing on your home is the designated meeting where you sign all loan paperwork and get keys to your home. Your mortgage lender, an officer from the title company, the seller and their representatives, a closing agent, and your real estate agent are typically present at this meeting.

You will receive the settlement statement for your home, as well as the mortgage note itself. Once you and the seller sign all required documents and bring required funds to the table, the home is finally yours.

The bottom line

If you’re a single woman who is considering buying a home, Ladejobi said it’s important to set yourself up for success. It’s a lot easier to purchase a home when you have an adequate emergency fund with several months of expenses set aside, she said. Having other debt paid off will also help since lenders will look at your down payment and your debt-to-income ratio to approve you for a loan.

Once you do your research and build a financial cushion, go for it. “There’s no perfect time to buy a home,” said Ladejobi. “You never know when the ideal partner will show up, if ever, so you shouldn’t wait around.”


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