If you are a single parent, then you have plenty on your mind without having to deal with the complexity of a government sponsored loan. It is hard enough to get an FHA mortgage in the first place, much less manage that and a child at the same time. However, you can navigate it all seamlessly with the right help. Here are five tips about FHA loans that will help to simplify the process and perhaps clear up some of the burning questions that you have no one to ask about.
Is there any direct help from the FHA for single parents?
The FHA does not have a specialized program for single parents like it does for first time home buyers; however, many of the features of FHA loans will help single parents. The FHA website also has plenty of advice that is directed by name at single parents, including advice suggesting a rigorous vetting process for a real estate agent and educating yourself about the home buying process.
Does the FHA say anything to single parents about preapproval?
The FHA admits that it may be more difficult for a single parent to qualify for an FHA loan because of the lack of multiple incomes in the household. However, this can be overridden by a preapproval. The preapproval process will allow a single parent to know how much house he or she can afford up front. This will save time for the household, because the parent will begin looking for houses within the right price range. If the real estate agent vetting process went well, the agent can do the searching instead of the parent.
Who should a single parent contact?
The FHA says to contact one of the local Department of Housing and Urban Development (HUD) real estate counseling agencies. HUD homes are funded under the same general umbrella as FHA loans, and many of those houses are great deals for single parents. There may also be many programs from local municipalities and credit unions that can help single parents. These programs will be located in the blue pages of the phone book, and if they are not, the mayor’s office or the office of the county registrar will have the numbers that single parents need.
State and local programs can offer further advice about the local market, and they can also offer resources in the form of a down payment assistance program or an underwriting insurance program.
What will I be responsible for paying out?
Regardless of the program that you use for insurance or down payment assistance, you will need to put some skin in the game when it comes to real estate. This means that you do need cash on the table, even if you may not need as much cash as the traditional home buyer.
Even though you may be able to avoid a 20 percent down payment because of government or credit union programs, you will still have to pay a fee up front. Prepare for this fee to be between one and four percent of the total price of the house. There will also be closing costs that are unavoidable. Getting a great real estate agent will help to reduce these costs, as some of them should be passed along to the seller. However, an extra one to two percent of the price of the home you are looking to buy should be held aside in a cash account to cover the closing.
Aside from the upfront fees and closing costs, you should begin to save now for an emergency fund. This fund should contain at least six months of all living expenses in cash. You can find the approximate monthly costs of a mortgage and other living costs by using a free online calculator and dictate the size of your emergency fund from these calculations. This money will protect you and your family if something unexpected happens in your life such as an emergency medical procedure or the loss of a job.
Is buying a house too expensive?
There are actually free online calculators that can help you to determine this! However, the final decision will truly depend on you sacrificing some upfront benefits for the long term survival of your family. In most cases, buying a house is the better decision. However, the lower upfront costs of renting can seem to make it much more palatable. This is why the FHA tells single parents to look at the hard numbers, not just gut feelings, when making this decision. Buying a home creates stability for the children in the family and peace of mind for the parent. It solidifies a family within a community, giving the children a school system and the parent a level of community support that simply cannot happen with renting.
Even if the FHA cannot give a single parent direct support, it is one of the best places to go to find other sources of support. Start on the FHA website and find your way into the programs that can give you the money, the advice, and the professional circle that you need to help your family in the long run, putting you in a great house and providing your children with stability. Also, do not overlook FHA programs like the 203k that may not be directly marketed to single parents but still bring benefits.
2 Point Highlight
State and local programs can offer further advice about the local market, and they can also offer resources in the form of a down payment assistance program or an underwriting insurance program.
You can find the approximate monthly costs of a mortgage and other living costs by using a free online calculator and dictate the size of your emergency fund from these calculations.
