Most single mothers find themselves having to start life all over again. Purchasing a safe home for their children is paramount to the family’s future. However, many single mothers must struggle to purchase a home because of costly down payments, high closing costs, and bad credit. But giving up isn’t an option. Fortunately, there can be plenty of assistance available for single mothers who are having issues buying a home.
FHA Mortgage Program
HUD administers the FHA Mortgage program. This organization has been assisting single moms purchase homes since the 1930s. The FHA mortgage program insures your loan so lenders are able to offer more to single moms seeking to buy housing, including:
· Smaller Down Payments
· Lower Closing Costs
· Flexible Qualifying Guidelines
The FHA can help single moms in a variety of ways:
1. They can reduce the required down payment to as low as 3.5% of the home’s purchase price.
2. Fees and closing costs can be included within the loan.
3. The loan can be refinanced to assist single moms with needed home repairs after they purchase the property.
FHA also helps single moms who want to purchase mobile homes, whether they are on land or in mobile home parks. This is wonderful because mobile home prices are usually much lower than the purchase price of a traditional home and it increases the chance that a home will be affordable.
Home Purchasers Tax Credit
Single moms who have already purchased a home aren’t out of luck. Single moms who purchased homes between 2008-2010 can benefit from what is called a home buyer’s tax credit. The time for claiming the tax credit is running out, so it is imperative that single mother’s with new homes file for the credit as soon as possible.
Currently there is a credit that refunds 20% of the interest paid on homes bought before April of 2012. When single mothers file taxes for 2012 they should make sure that they take advantage of that credit.
Bad Credit Loans for Single Moms
Many single mothers may have problems with bad credit due to divorce or unemployment. This doesn’t mean that getting a loan is impossible. Many lenders will still work with single mothers with credit issues. However, these loans usually come at a price.
Most bad credit loans have high interest rates. This could become a problem in the future if making monthly payments becomes burdensome. The last thing you need is to miss payments and suffer the astronomical charges because it becomes impossibly to catch up. Instead, single moms who have bad credit should consider the following options:
· Seller Financing Some motivated sellers may be willing to finance the home for you. The owner may require a down payment that could be small or large. Whatever type of loan arrangement is offered, single moms should make sure they get the terms in writing.
· Rent-to-Own If loans aren’t possible, single mothers may want to consider a rent to own option. This is similar to seller financing except that only a portion of the rent goes towards a down payment on the home. The other portion is income for the seller. Hopefully, after a period of time, credit is improved and the home can be financed under traditional means.
· Sub-prime Loans This loan should be reserved as a last option. These types of loans are offered to folks who cannot qualify for traditional loans. The interest rates are high, and there are high prepayment fees. That typically means that if the loan is paid off early, the buyer incurs a penalty.
Steps to Mortgage Approval
Single moms who are considering purchasing a home should take several steps to increase the chance of mortgage approval. The following hints may be helpful during the home buying process:
· Shop around for lenders.
· Know your credit score.
· Patience is required, especially when repairing credit.
· Know how much home you can afford.
· Never rely on one quote.
· Always ask questions.
Luckily there are ways to ensure that the home buying process goes smoothly and there are lots of ways to lower down payments, closing costs, various fees, and more. Even single moms with bad credit can qualify for home loans. Always consider every option carefully and the home buying process should be much smoother. Before long home ownership won’t be a dream, it will be a reality.