Getting a Home Loan as a Single Parent
In these times of economic uncertainties, financial support can be hard to find. Loans and grants always have conditions attached and a person’s financial status affects how easy it is to get approval.
When someone seeking finance for a home loan is a single parent this can complicate the process of finding support even more.
Three things are important in these circumstances: knowing where you can get advice and help, finding out what is needed to qualify for a loan, and choosing the best option to suit the circumstances.
Help and support
A home loan or mortgage might be required for a number of different reasons, such as setting up a new home for the children or funding for a single parent to purchase a property. There may be a need to refinance so that an existing mortgage can be paid off, or sometimes it makes sense to borrow against the equity in a property in order to undertake home improvements to add value to the property and to increase amenities.
In some cases government schemes, such as assistance from the Federal Housing Authority (FHA), are available to help single parents. Occasionally state Housing Authorities can help too, so it is worth checking these out at the earliest opportunity.
Banks and other lenders often have specialist advisors, or home loan consultants, who can help single parents to make decisions about their financial options. When parents know what they need, a quick phone call or fast-track mortgage application can often be the key to getting a dialogue started with a potential lender.
Qualifying for a loan
Several factors determine eligibility for finance, such as the level of investment the borrower will have in the property and the size of the down payment. The latter can be a gift from a relative or family friend, and some single parents may be eligible for help with a down payment from the HOME Investment Partnerships Program.
The applicant’s credit score will also be a consideration, plus their work record and income level. Those who are part-time workers are not necessarily excluded – they may just have to shop around a little more.
Sometimes single parents are able to buy a property jointly with another person. It may be necessary for the co-borrower to actually live on the premises, so this may not suit everyone.
Single parents can apply for FHA assistance, the approval of which means that the government is acting as a guarantor. Although this does not mean that they will automatically get a loan, it definitely increases their chances. This program has resulted in an increased rate of home loans for single parents.
Making the right choice
FHA assistance can really make a difference, as can HOME Investment Partnerships finance and Housing Vouchers programs. Single parents should take full advantage of any of these if they qualify. When a bank or other lender offers a home loan to a single parent, check that the repayments are affordable.
There is no point in being overstretched financially or reducing the quality of life for the children if an alternative, cheaper arrangement is also available.
Make sure insurance will cover eventualities such as a job loss or reduction in income for another reason, and remember, always read the small print.