By: Kathleen Willcox
If you’re a single parent, it’s arguably more challenging to buy a home than for those in a partnership with dual incomes. Yet it’s easy to see why so many single parents are eager to purchase a house. Beyond finding a perfect kitchen and playroom, owning a home is an integral part of building a healthy financial future.
And while homeownership may seem like an increasingly out-of-reach dream for single moms and dads, buying a house is definitely an achievable reality for most folks. To help inform you on this journey, we reached out to experts for tips on how to land a great mortgage as a single parent.
1. Leverage benefits
When applying for a mortgage, be sure to include any alimony and child benefit payments you receive.
“The most significant leverage a single parent has against lenders is his or her benefits,” says David Clark, a lawyer and executive partner at the Clark Law Office in Lansing, MI. “As a borrower, it’s essential to establish your capability to pay. So highlight the monetary amount you receive from child benefits, tax credits, and maintenance fees as all of these can be taken into account.”
2. Remember the 25% rule
Single parents have to carry a mortgage by themselves. With that in mind, it’s wise to leave plenty of financial wiggle room when shopping for a home. (An affordability calculator can help you determine what monthly payments you can swing.)
“As a single parent, you also have more ‘what ifs’ to worry about, so it’s important to give your budget breathing room for emergencies and extra child care costs,” says consumer finance expert Andrea Woroch, who’s based in Bakersfield, CA. “You should aim for your monthly mortgage—including taxes and insurance—to be around 25% of your income. This way, you have enough to cover house costs, child costs, and still reach savings goals, such as saving for retirement and college.”
3. Make a significant down payment if you can
No matter who you are or your financial and life situation, making a substantial down payment on a house will pay off.
“Getting a good mortgage rate can be a challenge for a single person,” acknowledges Kevin Miles, a finance analyst for Loan Advisor. “Making a big down payment will not only improve your chances of getting a good lender but also getting a better deal on your mortgage. It will also lower your monthly payments moving forward.”
Miles adds that having a good credit score (740-plus is considered optimal) will improve your odds of getting a reasonable mortgage rate, because good credit lets lenders know you can keep up with financial commitments.
4. Consider specialty loans or down payment assistance
Can’t swing a large down payment? That’s OK. As a single parent, you may be able to qualify for loans that require much less than the standard 20% down payment.
“A conforming, aka conventional, loan may only require a down payment as low as 3%, with a mortgage insurance add-on,” says Andrina Valdes, chief operating officer of Cornerstone Home Lending, in San Antonio, TX.
One of the best loans for single parents is from the United States Department of Agriculture, says Stephen Keighery, CEO and founder of Home Buyer Louisiana.
“The USDA loans are particularly helpful because most feature low-interest rates and do not require a down payment,” says Keighery.
The catch? “You have to ensure that the property is within the USDA-eligible area. It also requires you to pay a mortgage insurance premium upfront, but it’s significantly lower than many other premiums,” he adds.
And if you’re a teacher, firefighter, EMT, or member of law enforcement, Valdes says, the Good Neighbor Next Door program can get you up to 50% off on a foreclosed home.
5. Look for local loans
No matter what type of loan you ultimately try to secure, try to find a local lender.
“Working with a mortgage professional who is local to your market can be a huge asset,” says Michael Belfor, a mortgage banker and branch manager at American Pacific Mortgage in San Francisco.
“There are so many online platforms offering seemingly great deals, but that utilize loan officers out of the area or in call centers that may be completely out of the market,” Belfor adds. “This can make sorting out market-specific details very challenging.”
6. Beware of adjustable rates and multiple applications
The Federal Reserve may hike interest rates soon, so getting a mortgage with a fixed rate is critical.
“A 30-year fixed mortgage will allow a single person with kids to accurately forecast their monthly expenses,” says Nick Janovsky, global real estate adviser at Premier Sotheby’s International Realty in St. Petersburg, FL. “You should also watch out for pre-payment penalties. These are penalties the lender would charge you for selling the home within a set period of time.”
And beware of applying for multiple mortgages with different companies in a quest for the best offer.
By: Bryan Davis
Click here to view or print the entire monthly report compliments of the ACRE Corporate Cabinet.
Sales: Lake Martin waterfront sales totaled 37 units during August, a 23.2 percent increase from the same period in 2016. Sales for August 2016 on Lake Martin’s waterfront totaled 30 units. It is important to note that even single-digit changes in the home sales total can cause double-digit percentage changes.
Supply: The Lake Martin waterfront housing inventory in August was 247 units, a decrease of 6.8 percent from August 2016 and 44.7 percent below the July peak in 2010 of 447 units. August inventory decreased by 33.2 percent from July. There were 6.7 months of housing supply in August (6 months is considered equilibrium).
Pricing: The Lake Martin waterfront median sales price during August was $421,000, an increase of 15.3 percent from August 2016 and 4.3 percent below the prior month. Pricing will fluctuate from month to month because of changing composition of actual sales (lakefront vs. non-lakefront) and the sample size of data (closed transactions) being subject to seasonal buying patterns. ACRE recommends contacting a local real estate professional for additional market pricing information.
Industry analysis: “For the first time in 2017, we have increased our full-year growth outlook. The upgrade reflects economic activity gaining momentum at the end of the second quarter, though we see a great deal of uncertainty surrounding the forecast,” said Fannie Mae Chief Economist Doug Duncan. “The list of uncertainties now extends beyond the geopolitical and legislative, as the effects of Hurricanes Harvey and Irma will require time to untangle. Historically, natural disasters that hit heavily populated areas led to substantial near-term declines in economic activity but meaningful rebounds in subsequent quarters due to rebuilding efforts. Thus, economic growth in the second half of 2017 could still average a slightly stronger pace than the first half. Unfortunately, we continue to expect home sales to be flat during the second half of the year compared to the first half due to strong home price appreciation and lean inventories.”
Starting April 2, Kowaliga Restaurant will liven up a couple Sundays a month, offering live, acoustic music on the deck, in addition to a monthly crawfish boil. Entertainment will be on the first and third Sundays, 4:30-7:30pm, weather permitting. You already know Kowaliga is the best dining with a view on Lake Martin, so come enjoy some music too!
First-Sunday crawfish boil
Also kicking off April 2, Chef Ban will be boiling up a southern favorite. The first Sunday of the month, in addition to the regular menu, you can indulge in his steamy, spicy, yummy crawfish platter. The $15 offering comes with all the usual fixin’s, including 1 pound of boiled crawfish, potatoes, corn and sausage. Guests will be seated normally, and, if they’re interested in having the crawfish, their servers will deliver to them at their table.
Come on out and join us on April 2, for some live music and some crawfish!
By: Lisa Johnson Mandell
So you’re searching for a home in your price range, and you finally find one that has all the bells and whistles your heart desires. The only problem is, there’s a little thing called HOA fees attached. So what exactly are HOA fees, and what do you get for laying out all that extra cash?
First things first: HOA is an abbreviation for “homeowners association,” which applies to the owners of condos, townhouses, or freestanding homes in a planned community. The fee, which is usually charged monthly, goes to maintain the common areas of that community.
“Because multiple parties live in the same building or complex, all residents must be equally responsible for maintaining the common areas such as landscaping, elevators, swimming pools, clubhouses, parking garages, fitness rooms, sidewalks, security gates, roofing, and building exteriors,” says finance expert Amy Fontanelle. HOA fees also include insurance payments to cover those common areas.
Sure, homeowners already taking on a mortgage may hate coughing up more money for HOA dues. But they actually let you off the hook for a ton of home maintenance work. So before you start kvetching, consider all that HOA fees can do for you.
How much are HOA fees?
For a typical single-family home, HOA fees can cost homeowners around $200 to $300 per month, although they will be lower or much higher depending on the size of your unit and the amenities.
To give you an idea of the range of HOA fees, a 1,000-square-foot condo in Des Moines, IA, with no pool, spa, community room, or gym in the community has an HOA fee of $100 per month, which covers utilities, landscaping, and snow removal.
On the other end of the spectrum, there’s Hollywood’s fancy Sierra Towers condo building, which is filled to the brim with amenities like 24-hour concierge service and valet parking. They charge residents of a 3,400-square-foot condo about $4,000 per month in HOA fees. Suddenly that $250 monthly fee you’re considering feels a bit more reasonable, doesn’t it?
What is an HOA reserve fund?
HOA fees are usually divided into two parts: One portion goes toward monthly expenses, and the remaining money goes into a reserve fund, to save for long-term repairs and replacements such as roofs, plumbing, and exterior paint. Reserve funds also cover emergency expenses that arise when natural disasters, vandals, or just the unavoidable wear and tear strike.
What is an assessment?
Be aware that when your community is hit with extreme maintenance expenses—like a flood in the underground parking lot due to a broken water heater or a pipe bursting—homeowners insurance will cover some of it, but whatever’s left will have to be paid by your HOA.
Typically in these cases the HOA will tap the reserve fund, which may become depleted as a result. As a result, your HOA board may require you and your fellow homeowners in the community to pay a special assessment bill above and beyond your monthly HOA fee. Luckily, though, these assessments are typically temporary until the reserve is back up to a comfortable level.
What happens if I can’t pay the HOA fees?
Rest assured that most lending institutions take the HOA fee into consideration when they write up your mortgage. In other words, they evaluate your monthly income compared with your monthly expenses, and they won’t make a loan on the desired property unless they feel you can safely cover everything: your mortgage payment, taxes, and HOA fees.
But hey, life happens. If you lose your job or are unable to pay your HOA fees, you might be able to work something out with the HOA board. Be sure to talk to it before you miss even one payment. If you fall too far behind, the consequences could be the same as if you fail to make your mortgage payments. Bob Tankel, a Florida attorney specializing in HOA law, says you could be evicted or, in extreme instances, the board has the right to foreclose on your property.
The ins and outs of your HOA fees and what they cover in your new community will be spelled out in the covenants, conditions, and restrictions. Tankel suggests reading your CC&Rs carefully before you even buy your condo, and referring to it frequently once you move in so you’ll always know what to expect.