Financing a Home as a Single Parent: What are my Options?

home ownership

Being a single parent isn’t easy. There are many unique financial challenges single moms and dads face as a one income household. For many single parents, buying a home can truly seem like an impossibility. But don’t give up on your dream of homeownership just yet. There are plenty of loan and assistance programs single parents can take advantage of, you just need to know where to look. In New Jersey, there are many state and federal assistance programs for home buyers with specific circumstances. While none of these categories explicitly list “single parents,” they can be a great benefit for those looking to buy a home with one income.

HUD 

One of the best places for single parents to start their home search is the U.S. Department of Housing and Urban Development (HUD). Contacting your local New Jersey HUD office can give you access to resources that will help you find housing options as well as demystify the home-buying process. A HUD housing counselor can fill you in on local home buying programs you might not be aware of or help you obtain a loan. Some single parents may also qualify for subsidies and extra assistance that will help you afford decent housing (depending on your income and employment).

FHA

Federal Housing Administration (FHA) loans are popular for many first time home-buyers, including singles on their own as well as single parents. FHA loans are government insured and easier to qualify for than other similar loans. There are many benefits associated with FHA loans that make them appealing to single parents, including a 3.5% down payment, lower credit score minimums, and low monthly mortgage insurance rates. FHA loans are also flexible about how a first-time homebuyer is defined. If you are recently divorced or become a displaced homemaker, you can qualify as a first-time homebuyer as long as the only residence you’ve ever owned was with a former spouse.

VA

Veteran Affairs (VA) loans are also an excellent resource for single parents. If you are a single service member, a veteran, or the surviving spouse of a veteran, you could be eligible for VA loan programs. There are a number of benefits for qualified buyers, including waived down payments and mortgage insurance, low-interest rates, and on-going support throughout home ownership. If you are facing foreclosure, the VA can step in to help you keep your home or find a new residence. In the event of a work-related disability, there may be additional Veteran’s benefits you can take advantage of.

USDA

The United States Department of Agriculture (USDA) offers a few different programs for low- and moderate-income home buyers in rural areas. Even if you aren’t sure that you live in a “rural” area, the USDA’s programs are still worth looking into. Many of the regions where programs are offered are located just outside major cities. USDA loan programs offer low interest rates and zero down payment options. Qualified borrowers can get 100% financing and the mortgage insurance premium is one of the lowest offered in any program. USDA loans do have an income maximum, but most single parents do not meet this maximum.

Private Lenders

Some private lenders will offer loan programs for single income borrowers. These custom loan programs can cater terms to your specific needs to help ensure that loan applicants get pre-approved for a mortgage. These custom loan programs can include help with your credit score or assistance with your down payment, among other things. While not all lenders will offer these kinds of programs for single parents, it is worth looking into as you begin your home search.

 

As a single parent, you aren’t limited to these programs. Your county, city, or even township might offer their own programs to help the single parent home buyer. Don’t lose hope in your dreams of owning a home. If you would like help getting started or with the application process, Veitengruber Law is more than happy to help you get on the path to home ownership!

 

 

 

 

 

 

 

A Realistic Look at Purchasing a Home in New Jersey

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Purchasing a home is a significant life event, and one that should be taken very seriously. Because the process can be overwhelming, we’ve broken it down into easy-to-understand steps. Your home-buying experience may vary slightly, but all-in-all, these are the items you’ll have to tick off your list before you get the key to the front door.

  1. You finally find the perfect home. With the help of your real estate agent, you’ll make an offer to the seller and/or their agent. If your offer is below asking price, the seller may make a counter-offer. Once both buyer and seller agree on a price, an initial contract will be drawn up.
  2. It’s time to apply for a home loan. As soon as you and the seller reach the initial contract phase of the process, you’ll need to apply for a loan/mortgage. When you are approved for a loan, you or your lender must notify the sellers to keep them in the loop.
  3. Attorney review begins. This ‘due diligence’ period is a safety net. By law, a 3- day attorney review period is required, but can be extended if both parties agree. During this time frame, you as the buyer have the option of walking away from the contract without any repercussions.
  4. Home inspection takes place. During the due diligence period, a home inspector is hired by the buyer to ensure that there are no major structural problems with the home. If any significant issues are found, you may ask the seller to address them before moving forward with the purchase. You may also choose to back out of the contract if the results of the home inspection are not to your liking and the seller’s response is also less than optimal.
  5. Lender will request that the home value be appraised. Assuming you’ve made it through the home inspection and still want to move forward with purchasing the home, your lender will now ask you to have the value of the home appraised. You, the buyer, are usually responsible for any costs associated with the appraisal, but it is negotiable. If the home is appraised at a much lower value than the amount of the loan, the lender may not approve the loan.
  6. Your loan has been approved! Congratulations; if you’ve made it this far in the process, you’re just a few steps away from making your new house a home.
  7. A real estate attorney reviews all of the paperwork involved in your real estate transaction. It is very important that you select an attorney with significant real estate experience. Your attorney should be extremely familiar and comfortable with the closing process. He will be responsible for checking title on the property and will attend the closing with you.
  8. Final check of any required repairs. If, during the home inspection, any major structural problems were discovered, the seller typically agrees to have the repairs made. These repairs will then be inspected prior to closing.

Also, before the official real estate closing can take place, the seller will need to show that the property is not infested with termites. Any termite inspection and/or repairs are usually paid for buy the buyer, but can be negotiated like everything else in real estate.

You’ll need to show proof of a homeowner’s insurance policy at the closing, assuming you took out a mortgage loan to make the purchase. The “closing” – also called “settlement” – is the meeting at which you and the seller essentially make the official transfer of property and funds to complete the sale/purchase of the home. It is an extremely good idea to have your attorney attend the closing with you, to ensure that everything goes as planned.

To learn more about the real estate process, or to consult with a NJ real estate attorney, click here. You can also visit our legal blog, which you can search for a variety of topics relating to real estate sales, purchases and even renting. If you’d like to have us look over your real estate paperwork, give us a call today!

Image credit: Mark Moz