There are many steps you need to know to get a mortgage as a single mother. Now keep in mind that we are assuming that as a single mother you have a job, a credit history, and employment history. This is not a guide for how to get a mortgage with bad credit, but rather a general mortgage guide for single moms who are financially capable of pursuing a mortgage.
Getting A Mortgage To Buy A House
Getting a home mortgage can be a daunting task. It requires a lot of time and energy. You have to be prepared not only for the application process but for the stress accompanying this new venture. One of the first things you need to do is to assess your situation to see if you are financially ready to buy a home. Below is a list of types of information a mortgage lender will want to see:
Information you must have ready at hand to qualify for a mortgage:
- Verification of employment: the name of the company you work for, how much you make before they take out taxes and how long have you been at that job. For self employed people you will need a written statement by your tax preparer or a Certified Public Accountant, it should state the type of work you are involved in and how long you have been doing it also how much income you normally bring in.
- Information about your insurance: you should be ready to provide the name and telephone number of the agent you are using.
- About your banking: have paperwork showing what bank accounts you have stocks, mutual funds, hedge funds, 401k, savings and other accounts with balances
- What are your bills: Know what your monthly liabilities are. How much of your income is going out to pay debts or other bills.
- Confirmation of income: include a letter from your employer, T4 slips, and other financial statements — this will be used to determine how large a loan you will be able to receive.
- Proof you have the down payment amount– this information is used to calculate and confirm the difference between the purchase price and the mortgage. You can use saved income statements, RRSP’s, personal gifts and any equity you have from the sale of a previous property.
- Application for credit – this is how you provide the lending institution with all the information they will need to properly assess your request for a mortgage. This will also allow them to run their credit check.
- Credit Checks – this has become standard procedure and it is done to confirm the your credit worthiness.
Be forth coming about any past credit issues. It is better if you put it out there since they will find out in the end anyway.
There are mortgages specifically designed for people who are self-employed or otherwise work in a situation that doesn’t have paper trail. They can obtain what is called “stated income loans” although they come with a much higher interest rate.
Another thing that is of interest to the loan officer would be whether you have signed for other people to get loans. This is a potential debt, you know. This is computed into your debt to income ratio.
About Monetary Gifts
When you are expecting to receive funds from a family member to help with the purchase of your home you will need the proper documentation. Talk with the lender to find out what type of forms they will accept. They have to include this documentation in the proposal. Often family members are will to give the money but will balk at filling out forms, you can better manage their fears with proper documents.
Pre – Approval for a Mortgage Loan
Sellers take a person more seriously as a buyer when they have a letter of pre-approval. You can only get this after the lender has finished determining if you will get a loan.
The Difference between Pre-Approval and Pre-Qualifying
If you have applied for a mortgage and the loan officer did not request all of the information that you have just read about then you have only been through the pre-qualifying process. The pre-approval is an indept process that goes all the way to finding an underwriter. You will be issued a loan based on the house you have chosen and a satisfactory appraisal. If you have not went through this process you may experience some difficulties at closing. Be certain to ask to be pre-approved when you first talk with your loan officer.
Being single and buying a home
Now single mothers are doing it for themselves. Do not let anyone deter you from seeking to own your own home. Just because you are single mother, it doesn’t mean you cannot qualify for a mortgage loan. These days, more and more single people are diving into the homeowner’s market. Information form the National Association of Realtors clearly show that more homes are being purchased by single moms than ever before in history. The single buyer is over 32% of the applicants for new mortgages.
When deciding on where to buy a house you have to consider a few things. One of which is the school district. You want to purchase in a district that is known for their level of education. This will add to the resell value of the home. You want to seek out child friendly neighborhoods that have parks and other types of recreation available for all age groups.
Sure, there is stiff competition for single family homes but you have as much of a chance as any couple to get the home of your dreams. A lot of single mothers feel intimidated by the couples that are looking to buy, assuming because of they have two incomes that they will more easily qualify for the mortgage loan. It may be that they bring in more pre-tax income than you do, but if we know anything about human nature it is with income comes twice the expenses and credit card debt. Before you even start to look get pre-qualified and as soon as you have a house in mind get pre – approved. Having these statements with you when you approach a seller will give you buying power.
In October of 2008 congress passed a bill that destroyed the hopes of many. They have ruled that sellers can no longer assist with the down payment on a home. , if you are looking for down payment assistance please read the information on the FHA website first. Here is a link to another article that has information that you should consider before signing on a no-money down home mortgage loan: http://howtobuyahousewithbadcredit.org/how-to-buy-a-house-with-no-downpayment,
As a single mom, you don’t need to limit your search to just single-family houses you can also look at town houses and condominiums. There are some that are very kid friendly and this will take the burden of maintenance and repairs of f of you since the condo’s neighborhood association will handle this.
If you are unsure of handling the expense of a mortgage alone you may want to purchase a home with a relative. One option is to buy a duplex with a sister or brother each will have his own separate living space and the mortgage can be split down the middle just like the house. You should not do this without a few contracts in place detailing the agreement between the two of you. There should be proviso’s ion place that cover possible future situations such as one person wanting to sell and move out.
You may also buy a house with a living space in the basement or attic that you can rent out. Or if you have a spare bedroom rent it to someone to help cover the mortgage cost.
There are houses that are considered “ Handy Man’s specials”, just because you are a woman doesn’t mean you cannot be good with a hammer and drill. These houses cost less because they need some repairs. If you are the type that can get into a DIY project then this just might be a viable choice for you.
Getting A Mortgage To Build A House
Just as buying a home is a complete process so is financing the building of a house.
After you’ve talked with a lender you’ll know how much you can spend on your house. That will affect the choices you make including lot size, location and square footage of the proposed dwelling. It will make a difference in the choice of finishing materials as well. the designer and contractor will be able to give you an accurate estimate of what the house will cost to build.
Getting a loan for the construction project for a house is a different process. It is even more involved and in-depth
The first half is quite normal as far as applying for the initial loan. You will go through he pre-qualifying just as you would to buy a house. That is the end of regular however. Now you will need to choose a company to build the house. This will take some time as compare fees and prices. After that you and the contracted company’s representative must meet with the lender to fill out the forms to outline the new home in detail. You will also need an appraisal. The forms may be given to you to take to the contractor instead, but remember that you need to get them back to the loan officers at the earliest possible time.
Banks look at things a lot differently than layperson or ev3en the contractor for that matter. What this means is that the forms you get will list items differently and it is up to your contractor to decipher their code and get them the proper costs for each item on the list. That may be the hardest part of his job. Next to filing the papers building the house will seem easy.
You nay not see the original loan officer until you are ready to close on the house after it has been completed. You will still be dealing with the lending institution but just a different division.
Now that you know a bit more about what it takes to get ready for a mortgage, you can make a more informed decision.