Thursday, January 13, 2022 / by Steve Ticknor
Single Homebuyer Mortgage Tips
Even with the price of a Lake Havasu home on the rise, it is possible for single people (including those with children) to buy a home today. While many people depend on a dual income for their lifestyle, some people do not have this luxury. If you fall in this category and wish to buy a Havasu property this year, consider these mortgage tips for the single homebuyer.
Mortgage Tips That Help the Single Homebuyer
Include ALL Income
First of all, make sure you include all of your income when applying for a mortgage. That means what you earn from your job as well as any bonuses, commissions, alimony, long-term disability, social security, retirement, pension, and/or trust income. For single homebuyers with children, include any child support you receive as well as tax credits. You provide the sole income for this loan. Therefore, you need to show lenders all of the income you receive to establish your ability to repay the loan.
Aim for a 25% Mortgage Payment-to-Income Ratio
With no second income to rely on, a single homebuyer might need to keep their mortgage payment-to-income ratio a little below the 30% experts normally recommend. Instead of 30%, aim for 25%. This allows you a little extra wiggle room to handle life's little emergencies and still invest for your retirement.
Put as Much Down as You Possibly Can
This really applies to every homebuyer. But a single homebuyer needs to pay special attention to it. Yes, some mortgage programs only require 3% to 3.5% down. Veterans need $0 down to qualify. However, the more you put down, the lower your monthly payment. That keeps things much more affordable. Look for downpayment assistance programs. Ask your lender if you qualify for any of these helpful programs.
This works for supporting local entrepreneurs as well as lenders. Time and again, local credit unions and mortgage brokers offer great deals on mortgages. National lenders tend to focus on the overall market picture for the entire country. This may not be in your best interest. Local lenders know the eccentricities of the local market. So, whenever possible, seek out a local lender to help you with your mortgage needs.
Fixed-Rate Works Best for Homebuyers
Finally, think fixed-rate over adjustable-rate for your mortgage. Again, this really applies to all homebuyers, not just the single ones. We expect the Federal Reserve to boost the prime interest rate a few times in 2022. That makes it more expensive for things like car loans and credit cards. It also affects adjustable-rate mortgage loans, since the interest rate on it may go up when the prime rate goes up. That could mean a big increase on your monthly mortgage payment. When you tie down a fixed rate for your mortgage loan, your rate stays the same for the duration of your loan. Only your insurance and taxes change. Also, ask if your loan comes with any pre-payment penalties. You do not want to get saddled with a huge penalty to pay (in the thousands of dollars) if you decide to sell your Havasu home before you pay off your loan.
Sunstone Real Estate Group at Coldwell Banker Realty, Lake Havasu City, AZ