Who’s buying houses? All the single ladies | Get Financial Freedom Tips

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Saturday, March 16, 2019

Who’s buying houses? All the single ladies

Recent trends and societal shifts have empowered many single women to purchase their own properties, despite certain challenges. In fact, a 2018 study by the National Association of Realtors found that single women are buying homes at a rate that far exceeds the purchasing rate of single men.

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In 2017, 18% of homebuyers were single women, as compared to only 7% of single men. Single women between the ages of 51 and 60 comprised 20% of homebuyers for their age group, while single men of a similar age made up only 10%. Why are so many single women purchasing homes in such large numbers?

Top Reasons Why Single Women Buy Homes in the Seattle Area

While the housing market is entering into a new era, many women list the same factors for wanting to purchase their own home as they have in the past. According to experts, single women purchase homes at higher rates than single men for a number of reasons.
  • Many single women are taking note of favorable home prices in their local area as well as mortgage options geared toward single-parent households. As a result, more single women can place a down payment on a new residence at a rate of 3.5% or 5%, rather than the traditional and inaccessible 20%.
  • Rent increases are common across the country. Many women notice their rent increasing, compare it to potential mortgage prices, and decide that investing in a new home would save more money than continuing to rent. Single women may feel more confident in the housing market as the job market and property values stabilize.
  • Women are also seeing more favorable interest rates for their mortgages, although interest rates are on the rise. While single women are not basing their purchasing decisions on interest rates alone, they can easily calculate potential rates and factor them into their monthly budgets.
  • While an income gap between men and women exists across many professions, many single women are seeing increases in their personal earnings. As a result, single women can afford to purchase homes at higher rates than in the past, put a down payment on the property, and continue to afford monthly mortgage rates.
Industry Insights into Home Ownership for Single Women

According to a 2016 study by Builder Digital Experience cited by New Home Source, the rates at which single women are purchasing their own properties has significantly increased over the past few years. In addition, these women indicate similar purchasing triggers that led to their homeownership decisions over their respective years.

These statistics indicate a number of interesting trends in the buying patterns of single men and women. While the appeal of certain areas, such as interest rates and home prices, have significantly decreased over the years, other triggers have increased in popularity.

These trends can give realtors and mortgage companies significant insight into the experience of buying a house as a single woman. Most male and female trends followed similar patterns, with the exception of rent increases. This trigger increased for women, but decreased for men over the four-year period.

Between 2012 and 2016, the respective percentages of single female homeowners listed the following purchase triggers as reasons for purchasing a home:
  • Favorable home prices: 54% of single females in 2012, 23% of single females in 2016.
  • Better interest rates: 42% in 2012, 20% in 2016.
  • Marriage: 16% in 2012, 13% in 2016.
  • Rent increases: 16% in 2012, 23% in 2016.
  • Increased income: 13% in 2012, 18% in 2016.
  • Living closer to family and friends: 10% in 2012, 14% in 2016.
  • Safer neighborhoods: 6% in 2012, 13% in 2016.
In contrast, single male homeowners listed the following reasons for wanting to purchase a new home:
  • Favorable home prices: 54% of single males in 2012, 33% of single males in 2016.
  • Better interest rates: 46% in 2012, 24% in 2016.
  • Marriage: 15% in 2012, 14% in 2016.
  • Rent increases: 24% in 2012, 20% in 2016.
  • Increased income: 18% in 2012, 23% in 2016.
  • Living closer to family and friends: 9% in 2012, 13% in 2016.
  • Safer neighborhoods: 10% in 2012, 17% in 2016.
Purchasing Challenges Faced by Single Women in the Seattle Area

Many single women, particularly single mothers, can face significant challenges when purchasing a home. Two-income families have double the buying power, and many single women do not have a very simple path to ownership. While housing discrimination is illegal, single women still face a stigma attached to their identity as homeowners.

Sellers may assume that single women, particularly single mothers, may have too much difficulty making on-time payments. On average, single women make less money than single men and families, who have more buying power and therefore look better in the eyes of sellers. As a result, it can take single women years before they can save up enough to pay a 20% down payment on a home.

However, the face of homeownership is quickly changing. The attitude around single female homeownership is rapidly shifting, as evidenced by the rising number of single women purchasing their own homes.

Single women are earning more and gravitating toward safer, better neighborhoods. Single mothers are looking for well-kept, reputable neighborhoods to raise their children. More single women are taking advantage of home mortgage options and making strong offers for properties in desirable markets.

Mortgage Basics for Single Women

If you are a single woman in the market for a new home, understanding the basics of mortgages will greatly assist you in the purchasing process. Very few people can accomplish home ownership without a mortgage, and understanding the mortgage system can help make your purchasing dreams a reality!

The first decision you will have to make when you take out a home loan is what type of rate you want for your mortgage. You can choose between an adjustable interest rate or a fixed interest rate.
  • With a fixed interest loan, you will pay the same amount of interest throughout your repayment period. Your monthly payments will remain the same throughout.
  • With an adjustable-rate loan, your interest rate will remain fixed for a period of time, usually about five years. After this initial period, your mortgage company will increase your interest rate from time to time, usually every year. Your monthly payments will change each year.
Next, you will have to decide if you want a conventional loan or a government-controlled loan.
  • Private banks and entities issue conventional loans. Government entities do not insure or guarantee these loans. While conventional loans often have higher down payment requirements, they signal a stronger financial history to lenders and sellers due to higher credit requirements.
  • Some government programs administer home loans that have lower down payments and require lower credit scores. The Federal Housing Authority, the United States Department of Agriculture, and the Department of Veterans' Affairs administer home loans with certain eligibility requirements.
Finally, you will have to choose between a jumbo or conforming loan. Fannie Mae and Freddie Mac are two government oversight corporations that regulate the size of loans. If you take out a loan higher than the Freddie Mac or Fannie Mae limits, you have a jumbo loan. A loan that falls within these limits is a conforming loan. Jumbo loans tend to come with a higher interest rate and a higher risk to the lender.

Financing Options for Single Women

Picking a home mortgage for a single mom or single woman without children can be challenging. There are multiple financing options available on the market that are ideal for the single woman’s situation: low down payments, lower interest rates, assistance programs, etc. Before applying, make sure to research each loan option to ensure that it is right for your financial situation.
  • Federal Housing Authority loans are popular among single mothers due to their low credit requirements and low down payments.
  • Fannie Mae offers the HomeReady mortgage program at a 3% down payment available in certain pre-approved areas.
  • Conventional 97 is a loan program from the Federal Housing Finance Agency that provides loans at a 3% down payment.
  • Many conventional loan programs also offer low down payment options, beginning at 5%. In addition, some Housing and Urban Development initiatives and local housing authorities also offer affordable loan programs for single mothers.
While government-controlled loans do offer lower down payments, they can also lead to risky financial decisions. Many people believe they can afford a specific property because they can afford the down payment, but forget to factor in monthly mortgage payments on top of closing costs, insurance, property taxes, and other hidden fees.

In addition, paying a lower down payment upfront will lead to higher mortgage costs later on. The amount you pay upfront will factor into how the mortgage lender calculates your monthly costs. If you pay a 3% down payment on a $900,000 Kirkland home, for example, you still owe $873,000 on your mortgage plus interest. If you pay a 20% or even a 15% down payment, you will owe less and pay lower interest rates in the long run.

Home Purchasing Tips for Single Women

If you are buying a house as a single woman, there are a few key tips you should follow to avoid headaches and mishaps during the home buying process.
  • Focus on building your credit if you have a score lower than 680. Purchasing a home can put you against some tough competition, and you want to make sure that you can make an attractive offer. The strongest mortgages, such as conventional loans, require high credit scores. Having a conventional loan and good credit will signal to sellers and lenders that you have a strong financial history and are a low-risk borrower.
  • Avoid stretching your wallet too far. Even if you receive a pre-approval for a loan, you should carefully evaluate your financial situation prior to applying for the mortgage. Since you only have a single income, you should make sure that you are comfortable with your potential mortgage amount. Opt for a loan or home price that allows you to live comfortably while making on-time payments.
  • If you are currently renting your home or apartment, calculate your monthly payments. Are your monthly rental payments higher or the same as a mortgage payment? If so, you may want to take the plunge and purchase your home. You will feel secure in your purchase since your monthly budget will not change too much – just make sure to factor in extra costs, such as closing fees and insurance.
  • Consider your future plans. Do you want to remain in the area for a while, or would you want to move in a few years? Do you plan on having children or can you see your children building a life there? Are you nearing retirement and need certain mobility considerations? Consider your life goals before making a commitment to a new home. This tip will also help you decide what type of home you’d like to buy.
Home Purchasing Tips for Single Moms in Seattle, WA

Whether you are looking for the right home mortgage for single moms or perusing down payment options, these tips will help you find a home that’s best for you and your children.
  • Make a list of wants, needs, and deal-breakers when assessing a new property. You want to choose a home that is safe and desirable for both you and your children. Having this list will enable you to determine which properties you want to put an offer on and which ones you would like to avoid.
  • If you can, get pre-approval for a mortgage. Sammamish Mortgage offers this service at no fee. Pre-approval can help you further determine your monthly costs and know that you could receive financing for your new home from the lender.
  • Seek out a home inspection to make sure that the property is a good investment. You do not want to purchase a new home, only for it to run your credit into the ground due to constant repairs. You also want to make sure the home is safe for your children to live in.
  • Have your children help you make the final decision. You want your children to enjoy the home and they can bring a fresh perspective to the purchasing process.
If you are looking for a home in the WA, OR, CO, ID area, Sammamish Mortgage can help. We offer fast and accessible lending services to clients throughout the Pacific NW.

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