Mortgages for One
Mortgages are often thought of as a two-person operation, but that trend is starting to shift in the real estate market as individuals are increasingly seeking home loans on their own. Buyers who choose to go it alone enjoy some unique freedoms – like not being tied to another person's credit or employment history. However, they also may encounter some issues that might surprise them.
Writing for Housing Wire, executive VP & CMO for Guardian Mortgage Company Marcus McCue noted that demographics matter when contemplating a mortgage for one, since the needs of different single subsets of the population can vary. He further notes that the majority of singles looking to originate home loans fall into two categories: millennials (buyers 35 years old and younger) attempting to purchase their first homes, and divorcees from older age groups looking to assume or refinance their current residence under their own name.
Millennials' real estate concerns center around the difficulty in securing a first-time mortgage and the high total cost of taking out a home loan. This, on top of the price of the house itself, can also include tax fees and third-party costs like title insurance and closing costs. These issues can become particularly important to millennials who bring a single income into the purchase, as those costs can significantly impact the potential buyer's income-to-debt ratio and ultimately lower their total buying power.
This older and recently unattached group face somewhat different concerns. Noted McCue, after a divorce there can be problems with securing a new mortgage for someone who has been previously unemployed, self-employed or a stay-at-home parent.
If both parties' names were on the original loan, a quitclaim deed can be included in divorce proceedings. Parties can also agree to an Owelty Lien Agreement that assigns one spouse responsibility for the payment of the loan and rights to inhabit, but guarantees the other party their share of equity in the home at the time of a sale or refinance.
Gender has also been shown to affect the ability of a single individual to secure a loan. According to the Woodstock Institute, female applicants for a mortgage are 8 percent less likely to have a loan originated than their male counterparts, even when accounting for factors like loan-to-income ratios. The disparity is wider when it comes to refinancing a loan, as women were found to be able to secure a loan restructure 21 percent less often than men.