Often, homeownership is associated with couples. However, this doesn’t have to be the case. Though it can be easier, from an investment perspective, to have another person to share finances with, there are ways to overcome this obstacle. Large purchases can pose both risks and rewards, regardless of whether you are married or single. Single people can benefit from homeownership as much as any buyer.
If you are considering buying a house as a single, what are the pros and cons? Should you consider investing in a house without sharing financial responsibility? Let’s explore possible benefits and challenges so you can decide what’s your best move.
Why Invest in a House?
As property values rise, you may consider buying a house as an investment. Steadily climbing housing prices and property values may mean it’s a good idea to buy now—avoid paying more in the future and start building equity.
For many, rent prices are also on the rise. Paying high rent benefits someone else, rather than you. You may find that what you pay in rent could be enough for you to afford to pay off a mortgage while seeing a return on your money. Homeownership also means you have more control of your living circumstances. Avoid unexpected evictions because the landlord decides to sell, the need to renew your lease year to year, and so on.
Considering the Challenges
Often, the biggest challenge when buying a house as a single person is less buying power with a single income. Mortgage lenders look at your income to calculate what you can afford and what mortgage you qualify for. In a two-income household, lenders combine incomes, so there is more buying power. As a single, this income may be lower, and that can affect the loan you qualify for. A lower loan amount may limit the houses you can afford.
These types of challenges can be offset. When deciding, weigh the pros and cons, your finances, lifestyle, and future goals. Let’s first look at the pros and cons of investing in a house as a single person, then how to overcome these challenges if you decide to move forward.
Analyzing the Pros and Cons
With every large purchase, there are pros and cons to consider. What are the potential risks and rewards of buying a house as a single person?
Pros
- Personal expenses may be lower for a single person. If you don’t have kids or other attachments that increase expenses, for instance, this may put you in a better position to save money. Take advantage while monthly expenses are lower.
- What you pay in mortgage payments and property tax may be lower than monthly rent. Even if rent and mortgage payments cost about the same monthly, money spent on rent doesn’t yield a return on investment, while buying a house does.
- You can choose a house that is more suited to your needs, rather than settling for an apartment that might not meet all your preferences.
- Utilize extra space and rooms for monetization. You can help pay the mortgage down with roommates, for example.
Cons
- Single income means you may not have strong buying power and therefore may qualify for a smaller loan or higher interest rate.
- You have to save for the down payment individually, without sharing financial responsibilities.
- Owning a home is a lot of responsibility; it may be more work handling the repairs and maintenance without dividing the load with a partner. You also won’t be able to rely on apartment maintenance to make fixes for you.
- Owning property may limit the freedom to move whenever you desire. Property can tie you down to a certain area for years.
Overcoming the Challenges
If the financial barrier of buying a house as a single person is the only thing holding you back, there are practical steps to offset these challenges. Overcome obstacles with a few tips and strategies:
- Create a budget. Plan your spending as well as your saving. Creating a budget directs your money and makes your goal specific. Determine how much money you will need to cover the down payment and closing costs and how much you need to save each month.
- Pay off debt. Before saving for a house, consider paying off debt first. This reflects better when applying for a mortgage and allows you to save more money overall. Lower debt means a lender may approve you for a larger loan. Plus, you can save for a down payment faster with less debt.
- Obtain a cosigner. find someone to cosign the mortgage with you and increase your eligibility for a mortgage. Their income and credit will also count toward the mortgage, and you will be viewed as less of a risk by lenders.
- Enlist support. Being single doesn’t mean you are alone. Enlist the support of family, friends, and online community. Utilize these valuable resources for advice, information, and practical help.
- Shop around for the right loan. If you are a first-time homebuyer, some lenders offer loans specifically designed for you. These can range from zero- to low-down-payment loan programs. Depending on location and income, you might qualify for a USDA home loan with reduced rates. You may even be able to roll closing costs into the total loan amount and save money initially.
Choosing the right lender helps mitigate costs. When you partner with the right lender, you can often pay less in fees, saving you more for paying off a mortgage faster. Credit unions offer great rates and often have loyalty programs for their members.
Solarity Credit Union makes homeownership accessible. They can help you achieve your goals, whether you’re single or a first-time homebuyer struggling to save enough for a down payment. With great rates and flexible loan terms, they can help you achieve your dreams of ownership. Their expert Home Loan Guides will review your goals, income, and credit history and recommend the loan that’s best for your circumstances. Get in touch with their team today and enter the exciting world of homeownership.
