Great Tips for Single Women Buyers

women homebuyersIn the words of Aretha Franklin, sisters are doing it for themselves. For two years running, single women have purchased homes more often than single men. According to the National Association of Realtors, in 2011 almost twice as many single women (20% of all home purchases) bought homes as their single male peers (12%). And in 2010, that ratio was 21:10.

But this year, with lenders more cautious than ever, single buyers (of any gender) could run into more difficulty winning approval on a loan, since making enough money to qualify on just one income is obviously more challenging than qualifying on two. And with the economy far from fully recovered, single women buyers should be very cautious and educated about making a major purchase-- such as home.  

Here are a few tips for single women hoping to become a homeowner this year. 

Choosing the Safest, Most Realistic Loan Product

With one income, the monthly payment weighs more heavily on a single homebuyer. There’s also the unfortunate possibility of stereotype: that women buyers aren’t considered as “sophisticated” or “informed” as men buyers, a hypothesis put forth after a Consumer Federation of America study in 2006 which found that women received an outsized share of subprime mortgages.

Whatever the actual reason for this statistic, serious time with an honest, dependable mortgage broker--augmented by intense personal study-- is clearly essential in deciding what kind of loan works best. A 30-year fixed offers security with its guaranteed interest rate and static payments for 30 years; but, this loan certainly isn’t the cheapest option. A 15-year fixed, though it requires higher monthly payments, costs much less over the life of the loan because of (drastic) savings on interest.

Meanwhile, option ARMs can either save money or end by bankrupting the buyer, because the interest, and thus the monthly payments, vary with federal interest rates, which means they can stay the same, go down, or go up substantially.They are perhaps the riskiest of all choices, but that doesn’t mean the tuned in single woman can’t take advantage of them. It only means she should proceed with caution.

How Much Is Safe to Borrow?

These days, lenders aren’t motivated to talk anyone into borrowing more than she can afford. Still, women should be active in deciding how much is too much. Aside from the house payment and other bills, financial planning experts recommend retirement savings. Adam Hibble of PS Valuations, says “I have several single women clients. Though we look at home ownership as a long term investment, it can’t be the only investment. After all, they have to sell to realize the profit, and then they may end up using that profit to buy a new home. Diversification is key: I tell my clients they should steer away from a mortgage that's so big, they can’t set aside 10% of their income to allocate to a retirement plan."

Getting Concessions

If maintaining a home runs 1%-3% of the home’s original purchase price per year, then the savvy woman buyer might want to ask her home seller to repair as much as possible-- before she buys. She needs an experienced home inspector who can explain what repairs cost, what needs repairing sooner rather than later, and what can be skipped. She also needs a good Realtor® who can help her gauge the seller’s willingness to make repairs. A motivated seller will be more amenable than one who’s not pressured to sell, and Realtors ®, with their insider information, make powerful allies in getting the best deal without blowing the deal completely.

Special Loan Programs for Single Women

In the past and in the present, the best bets for single women looking for loans with lower down payments or special interest rates are the following agencies (note most are directed at single mothers).

So in a nutshell, ladies, the keys to success are: education, caution, negotiaton, and support for your goals. And in reality, most of these tips could be helpful to single men buyers, and couples as well. 

Anna Marie Erwert writes from both the renter and new buyer perspective, having (finally) achieved both statuses. She focuses on national real estate trends, specializing in the San Francisco Bay Area and Pacific Northwest. Follow Anna on Twitter: @AnnaMarieErwert.