7 Ways to Make Buying a Home on Your Own a Reality
Purchasing your first home is really exciting—but it can also be daunting, especially when going it alone. SoFi members aren’t easily intimidated, however. In fact, according to the March 2016 Home Buyer and Seller Generational Trends report, people age 35 and younger continue to be the largest group of home buyers at 35%, and 67% of those buyers are purchasing homes for the first time. With 10% down on loans up to $3 million, SoFi makes it easier than ever before for solo buyers and others to own a home.
In April 2016, executive assistant Heidi Furness, who received a master’s in public administration from Brigham Young University, joined the growing ranks of women making their homeownership dreams come true when she purchased her first place in Salt Lake City using a SoFimortgage loan. As a savvy investor, Furness, who was renting prior to purchasing her house, knew that if she took on roommates she could gain equity and get a little help paying down her mortgage—a win-win. “I have always planned to own a home, but wasn’t sure I could do it financially,” Furness said. “I was surprised at the financing options available that helped me achieve it much earlier than I expected.”
The process was a learning experience for her.” I did a lot of research online, using resources like first-time home purchase blogs, and I’m learning patience,” says Furness, “allowing time to improve the back yard and other areas.”
Solo home buyers have plenty of resources to make their experiences go smoothly, but knowledge is power, and we want you to have a lot of power. Even in the hottest markets, these seven tips will help ensure your home buying experience is as stress-free as possible:
1. Research is your best friend. A little investigating goes a long way. “Find out all you can about the property you’d like to purchase,” suggests Furness. For example, exercise due diligence and have the sewer line scoped with a camera to assess pipe conditions or take other measures suggested by your realtor or inspector. Also, consider options regarding future plans. “Knowing I could rent the home out for future income was empowering because I was independently making a decision based on my own goals,” says Furness.
2. Run the numbers. Besides factoring in a mortgage, you’ll need to account for new monthly costs that might not have existed when renting, such as water or homeowners insurance. Plus, when something breaks in your new house, it’s up to you to fix it.
So budget for future repairs, too. “When buying alone, the income and assets of only one person are considered in the process. There’s no one else to fall back on,” says Michael Tannenbaum, SoFi’s VP of Mortgage. “But on the plus side, there are no financial surprises; solo home buyers don’t have to worry about a coowner’s secret debts or bad money habits.”
Related: Use SoFi’s Home Improvement Cost Calculator to understand how much your future renovations may cost.
3. Get your financial ducks in a row. To keep the process moving efficiently, gather your two most recent pay stubs and W2s, and any year-end pay stubs that demonstrate cash bonuses or other income that doesn’t occur every pay period. “I consolidated my bank accounts so everything was in one place,” says Furness. “I also had my credit checked, so I had no surprises.” Tannenbaum also suggests gathering large deposit and withdrawal receipts so lenders can easily understand the movement of your money. “In fact,” he adds, “it may be best to keep money static for two months prior to starting the mortgage process to avoid delays due to questions about purchases.”
4. Be selective about the people you work with. A second opinion is valuable when it comes to home buying, but carefully vet the people you consult. Those involved in the buying process are not your best friends, but they can be great sources of information. “My real estate agent became a confidant through her willingness to educate me,” Furness said, “and I also bounced ideas off a co-worker who was purchasing her first place at the same time.”
Tannenbaum reminds buyers that even lenders can provide expertise. “SoFi can also help emotionally, by answering questions through our blog or customer support where you can speak to someone live and ask questions. We also offer unique ways to help borrowers financially, including our 10% down mortgage loan option, 5% of which has to come from their own funds, but the rest can be gifted from someone else.”
5. Maybe—just maybe—consider a co-owner. If you’d really like to buy a home, but can’t swing it alone, think about buying with a friend or family member. Just remember that buying with someone else requires a lot of compromises and financial sharing. “Trust is key,” Tannenbaum cautions. “A mortgage is an obligation for both borrowers, so you’ll need to feel comfortable discussing any debts, financial obligations, and plans for continued employment and income.”
6. Don’t switch jobs just yet. Starting a new job close to applying for a mortgage can complicate the process and prevent you from getting the best interest rate. “Lenders want security,” says Tannenbaum. “If you’re switching within your industry, a lender will be more comfortable, but if you’ve changed industries completely, the lender will want to see pay stubs going back two years. If a new job pays on commission, evidence of commissions and/or bonuses will be required.
7. Ask questions—lots of them. Second opinions are always helpful, but remember that the final decision is, ultimately, yours. Only you know what’s best for your situation and future goals. Still, you’ll likely have plenty of questions all along the way. Furness specifically remembers that closing time is ripe for an inquisition. “You’ll sign a lot of multi-page documents, and you should read everyone to know exactly what you’re signing up for,” she says. “While I didn’t ask for any changes, I had peace of mind knowing that I was being thorough.”
The process of buying a home on your own can be intense, but at the end of the tunnel, you’ll own your own house, which is a pretty amazing accomplishment. “With the right team, it can be a smooth and mostly painless process,” said Furness. “I assumed it would be more difficult than it was. Now, it’s just super exciting to have my own home.”
If you’ve been dreaming about buying your first home, download our super helpful SoFi Guide to First Time Home Buying to get a grasp on all the things to consider before making up your mind.