It is truly challenging to be a single mother yet, most women are proud to take care of their kids on their own and run the show single-handedly. It could really be a much-rewarding experience for them. It may prove to be quite overwhelming to raise children while making ends meet. Life is tough as it is, but then even a single mom would love to give her kids the security of living in their own home. The wish to become a homeowner in the future would make things even more difficult.
As per https://www.wealthysinglemommy.com, there were around 10 million single mom-led families in the U.S.A. in 2017 which was 3 times the actual number in the year 1960. Statistics reveal that 25 percent of a total number of families are run by single moms while 40 percent of the total numbers of babies that are born in the U.S.A. are actually born to single moms. However, 57 percent of the total number of babies that were born to millennials actually was born out of wedlock.
A single mom has numerous responsibilities to fulfill. She needs to take grave financial decisions and on top of that, taking out home loans and performing the relevant tasks could seem insurmountable. As a single mom, you are supposed to be fully responsible for the future security and financial decisions relating to your family. Purchasing a home would mean additional mental stress and more pressure on your daily way of life. Fortunately, single moms have access to several home loan programs which would be offering lower down payments
How Can Single Moms Apply for Home Loans?
It could prove to be a real struggle for single moms to maintain the household budget solely on one single income. If you are a single mom supporting a family on your own, you may at times; end up buying more on credit card and sometimes, your spending exceeds the monthly budget. Mortgage lenders would be looking at your latest financial and credit activity for verifying that you have the capacity to pay back the home loan. They would precisely want to examine the value of the total debts owed by you and also, your precise debt-to-income ratio as compared to your income every month and that actually falls into an affordable balance of approximately 40 percent.
This implies that suppose you are a single mom and you are carrying some loans and also, several balances on your credit card with just a single income, it may be a cause of concern for the mortgage lenders as they would be worried that the extra debt or the new home loan with just one income will make it less probable that you would be paying the lenders back on time and in full.
However, it is quite unfair to stop dreaming about owning a home for your kids. In reality, there are a host of home loans available to single mothers. Moreover, some extra services are also available for making your dream of owning a house, a reality. You only have to know precisely where to look. You may visit https://www.libertylending.com/ for perfect loan solutions.
Getting Ready for a Down Payment
When most people are buying a home, they would determine a workable and reasonable budget that is based primarily on specific home prices. They often fail to remember that most traditional mortgages would be needing down payments that are between 10 percent and 20 percent. Often a $225,000 home looks pretty reasonable and definitely affordable as compared to the million-dollar estates close by, however, you would still require arranging between $25,000 and $50,000 just for securing your home loan alone.
It may be an unrealistic expectation for a single mom to have kept aside that much from kids’ education and other future expenses. As a single mom, it is advisable for you to browse through some special loan programs that are actually designed for assisting individuals with limited incomes. By availing these special programs, you could get the money required for securing a new home.
The Best Home Loans 2018 for Single Mothers
While looking for mortgages particularly, for single moms, first of all, you must consider figuring out the exact kinds of assistance you would be qualifying for. Your location, your history, and even your work could be the road to essentially an affordable future just right for you and your kids.
As far as, these loan programs are concerned, you would be applying for such a loan program at a local lender or the bank that is offering them. You cannot apply for such loan programs straightaway from the government agency supporting them. That is because these agencies would be the lender’s insurance that lender’s losses could be recouped via the government in the event you fail to come up with the loan payments.
FHA loans are supposed to be supported by the FHA or the Federal Housing Administration. FHA loans promise lower down payment of about just 3.5 percent. FHA loans are definitely not stringent about your credit score requirements. FHA loans are just the right home loans for single moms as they were strategically designed for assisting anyone trying to gain home ownership. Friends and family could gift single moms FHA loan’s down payments till the loan is fully paid. The main reason why FHA loans are provided without strict entry criteria seems to be the fact that FHA actually insures them. Hence, the lender seems to be least concerned about the risk involving you defaulting. You would be technically paying for this insurance; however, it would be rolled effectively into your entire loan.
VA loans are offered by the U.S. Department of Veteran Affairs. They are the best loan programs for single mothers who are service members, veterans, or even surviving wives of eligible service members. These loans allow veterans to become eligible for home ownership with least risk to lenders or minimal cost. VA loans need no down payments and you do not need to pay any insurance premiums. The VA would be guaranteeing only specific amounts depending on the region and the applicable limit for most regions would be $424,100, which actually, goes up to more than $700,000 in certain regions of the country.
USDA loans are actually backed by the ‘United States Department of Agriculture’. In this context, you must understand that USDA loans are meant for individuals earning low to moderate salaries. These loans do not necessitate down payments and offer relatively lower mortgage insurance as compared to the FHA loans. You must keep in mind that these USDA loans could be applicable exclusively for properties in precise regions.
Conclusion: Rely on Conventional Loans
We have discussed three popular home loan programs for single moms but we must not forget about conventional loans. Single moms are eligible for some conventional loans. These loans are standard offerings via conventional mortgage lenders and do not typically offer any special benefits or downsides. Down payment and minimum credit score requirements would be varying from lender to lender. In case you are a single mother with a good credit score, a steady income, and adequate down payment, you would easily qualify for conventional loans. Seek professional advice from qualified credit counselors and manage your loans and other aspects of your finances well for a secured future both for you and your children.