Often single mothers find it difficult making ends meet, with rent being a significant proportion of their income. Therefore, buying a home and working towards paying it off can be the ideal situation in some cases, however not all. It is important to note that especially given the global financial crisis, housing values suffered greatly and many people experienced a reduction in the value of their homes below what they had paid for. Not a good situation! So, it is important to think about how long you think you will be in your current home to work out if you will be there long enough for it to appreciate in value and increase enough to account for transaction costs.
If you do decide to purchase your own home, a home loan for a single mother can give you that extra helping hand which you will need in order to improve the life of yourself and your children. Using this loan, you can move into a better locality and raise your kids in a better way.
Home loans for single mothers are available but a bit difficult to get approved. Though loans are available to the general public, home loans for single mothers will include details specific only to single mothers and you will need to meet specific criteria.
What to look for in a lender
First, look at the rate the lender is offering. There is will often be some difference from lender to lender, although not much. However, even just a fraction of a percent makes a big difference in how much you will pay over the life of the loan, even if it does not make a huge impact on your monthly payment. Be sure to compare the rate with the fees you will pay at closing. Some lenders make up for a lower rate with high closing costs, so make sure you ask for an itemized list of closing costs as you compare loan offers.
It is best for you to use a lender with whom you can speak to face to face. This way, you can ask all the questions you want and as online lenders can easily take advantage of you in some way. Never use a dishonest lender. Some lenders will advice you to put dishonest information in the application form. This is strongly unadvisable as this can get you in trouble. It usually indicated that the lender is not looking out for your best interests, so best you find another one – there are plenty to choose from! Maybe ask you friends / colleagues if they could recommend you a good lender.
The issues that single mothers face in getting approval is the following
Single income – As per housing loan guidelines, a person can only have 30% of this monthly income as housing loan installment. This makes is difficult for single mothers.
Credit history – Sometimes single mothers have enough money and good employment also but past credit history makes it difficult for her to get the home loan application approved.
Down payment problems – Some lenders require 10% down payment of the house in order to get approval of the loan which can be difficult for single mothers. However, there are schemes out there which can enable you get the loan with only a 3% down payment.
The most important thing to remember is that if you decide to get a mortgage, you must make sure you can make the repayments. Staying on top of your finances is crucial to staying out of financial trouble.