Is It Smart to Buy a Home Alone?

When you only have a single income to buy a home is it really a smart decision? Even with low interest rates and a nest egg saved up, you may be better off waiting for home prices and sales to drop to make your move. Here we’re going to talk about a few of the benefits and not so great things about buying a home alone.

Single People Accounted for 35% of Home Sales Last Year

It might not seem like much, but over 1/3rd of home sales in 2012 were completed by single people. From 1999 to 2012, more and more singles have been buying homes on their own – but before that, a single person buying a home accounted for less than 10% of Canadian home and condo purchases.

Another interesting trend is the fact that single women buy homes 2-3x more than single men. It may be that men don’t start looking for a home until they have partners to do so – but it could also be that many of the single women that buy a home are single parents or professionals looking towards the future, trying to find a way to diversify their investment portfolio.

A Greater Risk for One

But while more singles are buying homes, that doesn’t mean that it’s less risky. If you only have that one income to depend on, if you get sick and can’t make your payments, all the risk falls on you. No nest egg, no best laid plans can prepare you for illness, housing crash or losing your job.

If you’re a single homebuyer, ask yourself the following questions:

·Am I buying a home because I want one, or because I think I should have one?

·Am I trying to capitalize on low interest rates to buy a home and flip it?

·Do I have enough in savings for both the minimum down payment +20%?

Knowing that you not only have enough to buy a home but pay it down quickly gives you some security. You’ll also want to make sure that you’re buying a home for the right reasons; being pressured to buy a home because others expect you to is never a good idea. Likewise,

Mortgage Lenders Getting Wise to Single Buyers

More and more mortgage lenders are opening their coffers to single homebuyers, but their criteria can be a little strict. Here are a few things you’ll need to keep an eye on:

Have I Switched Jobs in the Last 3 Months? If so, wait another 3 months before you apply to prove you’ll be able to depend on that job to pay your mortgage.

Can I Prove My Income? If you’re using gift money from friends and family, have child support or other types of income that should be considered when buying a home, make sure you know what that documentation is ahead of time.

Am I Carrying More than 30% of My Credit Limit Every Month? While you can carry more, you’ll want to pay down as much debt as possible before you begin to apply for a mortgage. Every dollar of debt is a liability and another reason you won’t be able to put money towards your mortgage.

Just because you’re single doesn’t mean you can’t buy a home, but you’ll want to do a little research ahead of time to make sure you’re ready to take the plunge! Good luck and happy house hunting!

The Goodale Miller Team is the #1 team in Canada for Century 21 8 years running. Specializing in Oakville luxury real estate including Lakefront homes, infill building lots, condominiums and more. You can visit their website here: http://www.goodalemillerteam.com/