Buying a house is a lifelong dream for many but it takes years of savings and commitment to finally make that dream come true. One of the most expensive things about buying a house is paying mortgages and saving for a down payment. If yours is a single income, then it can be pretty hard to buy a house. However, it is not impossible and there are ways in which you can still achieve this dream. If you are also wanting to buy a house and are the only earner, this article is for you.
Keep track of the credit score
A credit score is important when you apply for a mortgage because that will let your lender know your creditworthiness. Having a good credit score is necessary and you can check the same by opting for a free credit report. Getting a credit report will make sure that there are no mistakes on it as that can harm your application to get a mortgage for you to buy a house on a single income.
If you find any incorrect information, you can contact the credit rating agency and resolve the issue. Also, it is suggested that you should not make a higher amount of purchases before applying for a home loan because that reflects on your credit score.
Also, maintain a habit of paying your bills every month in full. In this way, you will be able to build a higher credit score. It is advisable to maintain a good credit utilization ratio such as using the minimum amount on a credit card every month.
Make use of government programs and loans
It is known that to buy a house, you are required to pay at least 20% of the down payment. Now, this 20% sounds low but when you convert it into an amount it can be pretty high. A lot of time people have to save for years to afford a down payment.
If you are also juggling between saving for a down payment, you can give a try to a government loan. You can get assistance from the Federal Housing Administration mortgage program. Under this program, you only have to pay 3.5% of the down payment. Though one drawback of this lower down payment is that you will have lesser equity in your own house. It is a good alternative if you are not able to save a huge amount to buy a house. And you can always earn more and pay back the loan as soon as possible.
Have a co-borrower on your loan
If you can arrange a guarantor or a co-borrower, you can get easy access to a loan with a lower interest rate. Make sure that the person you are co-borrowing with has a good credit score so as to make your mortgage file stronger.
If you are finding it hard to be eligible for a home loan then this can be a good solution. You also have to keep in mind that just as the co-borrower makes your loan application stronger he or she will also have a partnership in your house.
Opt for mortgage protection insurance
Mortgage payments are one of the highest expenses that you will have to incur once you buy a house. And as a single earner, it can be pretty difficult and also looms a threat on your family in case something happens to you.
If you are not getting any assistance in terms of disability insurance from your employer then you can go for mortgage protection life insurance. If something unfortunate happens to you it will protect your family financially. Even if you do not have a stable job or have poor health conditions, this option can help you.