We have a pretty big past customer base that consists of Single Female Home Buyers. That surprises some folks we talk to, because the commercials and ads for real estate companies and mortgage companies show TWO people buying a home! What if you are ready to go it alone? Is that even possible? “Home ownership is not just for happy couples – even if the banks seem to prefer having two names on the mortgage.” Single Income First Home Buyer Programs are available specifically for this growing group of home buyers.
Again, with our particular North Carolina business, we are especially seeing an increase in single females buying homes. According to a report released annually by the National Association of Realtors, the largest share of home buyers (30 percent) were between the ages of 25 and 34.
Two out of every three (66 percent) home buyers were married, but single home buyers made up a quarter (25 percent) of the market.
Single females made up the majority of the single home buyer market, accounting for 16 percent of all home buyers, while single males made up nine percent of the overall market.
“All over the world, the percentage of single buyers is rising as more young people delay getting married until their 30’s, and more single parents decide to buy homes rather than rent in order to give their children more stability,” says Jan Davel, MD of the RealNet estate agency group.
Locally, single buyers currently account for about 19% of all home sales, up from 13% four years ago. According to David O’Doherty Real Estate Clayton NC, a respected Agent in Johnston County
And even if solo house hunting feels a bit daunting, he says, “buying your own home now is one of the smartest decisions you can make, especially if you are secure in your job and committed to your location for the next few years, because both prices and interest rates are on a rising trend that will make it increasingly difficult for buyers of all sorts to qualify for home loans.”
What’s more, it need not be a frightening experience if you just follow a few guidelines, starting with careful financial planning. “It is important to get pre-qualified for a home loan so that you will have a good idea of what you can afford and not waste time looking at homes that are beyond your budget.”
How to Qualify: Single Income First Home Buyer
In the state of North Carolina it’s against the LAW for us to put you into a home that we can prove you qualify for.
This is especially important to know for the Single Income First Time Home Buyer who is working part time, or isn’t reporting all of their income on a Tax Return. We have to pull a tax transcript in the qualification process – this means that if you are a Sheriff’s Deputy (for instance) and you write off all of your uniform’s, mileage, etc. it could be difficult for us to qualify you.
We are looking at the income that shows on line 37 of your tax return, very bottom of the first page of your return. It’s called Adjusted Gross Income.
I could be over simplifying this – but if your W-2 income is $38,000 and you have non-reimbursed business expenses of $4,500 – then we are only allowed to use $33,500 to qualify you to buy a house.
The Underwriter is also going to be looking at “Payment Shock explained for mortgage approval” Meaning the difference between what you are currently paying for housing, versus what you will be paying.
Let’s say you’ve been living at home, saving money to purchase your first home, and you are one of those lucky folks who have never paid rent before. One of the requirements for a Home Loan in NC is a great Rental “Housing” payment record. If you’ve never paid for rent, then the Underwriter is forced to consider Payment Shock.
Here’s another example… What if you’ve been sharing an apartment with friends, and your portion of the rent was only $300 a month? A mortgage payment is likely to be at least $600.
Even if you can easily afford the $600, and you have good credit scores, one of the requirements an underwriter looking at a Single Income First Time Home Buyer is to explain why they “believe” you can handle the higher monthly housing expense.
One of the things they will count on, in this situation, is that you’ve shown that you are saving money.
So you’ve been paying $300 a month for rent – but you’ve consistently set $300 a month into Savings. This is something an Underwriter can see, and use as a reason to approve you.
Just like “couples” buying a home – the Single Income First Time Home Buyer can get a gift for the down payment or (assuming you qualify) you can get a down payment grant from the State of NC.
Mortgage Programs for the Single Income First Time Home Buyer
Single Income First Time Home Buyers should also be aware of the opportunity to use the Mortgage Tax Credits available to them!
Up to $2000 annually ( or roughly $166 a month) is added to your paycheck as a dollar for dollar reduction of your federal tax liability.
The remaining 70% of the interest you pay on your mortgage during the year is still a tax deduction on April 15th!(remember that there’s a little different schedule for those buying a new home in NC).
If you want to buy a house anywhere in North Carolina, and you need a mortgage loan, or if you have more questions about:
How to buy a house in North Carolina as a Single Income First Time Home Buyer
Please call Steve and Eleanor Thorne 919-649-5058.
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