Tips for Owning a Home on a Single Income

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Owning a home is already stressful, even more so if you’re buying or building one on a single income. Having a single income could mean that your borrowing capacity is less than a dual-income family, limiting your options and increasing your risk in the eyes of mortgage lenders.

However, your homeownership dream can be achievable with a few simple tricks. Below are fool-proof ways you can make your homeownership dream a reality.

Opt for a Custom Home

A lot of people believe that production homes are more affordable than custom ones, but that is not always the case. A custom home allows you to set a specific budget and have full control of what materials, furnishings, and fixtures to use. This means that you can tailor your house to fit your exact needs at price points you can afford. While production homes can be affordable, but they may not meet your needs and preferences.

A reputable builder of custom homes can give you the best value for your money, making your home building process less stressful and more realistic. Of course, that would mean you’ll have to go through the complex process of building a home, but it will be worth it.

Increase Your Credit

Having a stellar credit score is not an easy thing to achieve, whether you’re single or not. But it’s a must if you want your home buying experience to go smoothly. Before you start shopping for a house or researching builders, make sure that you have your credit card debt well managed. Try to reduce your credit limit if you can and make sure you pay your bills on time.

Get a Mortgage Broker

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When money is tight, it’s tempting to do everything yourself to save on professional fees. But getting an experienced mortgage broker is a must and a wise move that could save you money in the long run. A broker can get you the best possible deal for your budget and make sure that the mortgage product you pre-qualify and qualify for really matches with your income, needs, and wants. A trusted broker can also give you sound advice throughout the process and help you avoid lenders that might not have your best interests at heart. Your broker might even help you qualify for government loan products designed for single parents or low-income families.

Save up for a sizable deposit

Nowadays, it’s easy to get a mortgage with a 5 percent deposit, and while it’s tempting to take this route, you have to think ahead. A low down payment means bigger mortgage repayments and interest rates, add to that the annual private mortgage insurance (PMI) that typically ranges from .55 to 2.25 percent of the original loan amount. On a single income, these fees can get overwhelming real quick. Give yourself a few years to save up for a 20 percent down payment, so you can enjoy better rates and zero PMI.

Protect your income

If homeownership is your ultimate goal, then you should take every measure to protect the income that you have now and work towards earning more in the future. Buying a home and maintaining it is a huge financial undertaking, but it’s easier if you have a steady job, some savings, and other sources of income. In addition to the down payment, you should also set aside a little extra for other fees and expenses involved in buying a home.

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