We are just going to dive right in as we discuss the myths about homeownership and how to overcome each.Do you automatically dismiss the thought of owning your dream home? The truth is homeownership is not that far off!
According to the U.S. Census Bureau, there are approximately 15 million single mothers in the United States (2010), raising 22 million children. Continued research supports that homeownership provides financial security that not only safeguards a woman’s future, but establishes a sense of security and well-being among her children. The Bureau of Labor Statistics reports that women in the labor force have increased almost 30% over the last four decades. Yet, women only accounted for 17% of home purchases (in 2016), according to the Women in the Housing & Real Estate Ecosystem’s website.
Many single mothers do not believe that they can become homeowners for a variety of reasons, citing such obstacles as limited income, previous credit history challenges, prior discouraging attempts, or lack of education on appropriate next steps to begin the process. Today, we’re uncovering the myths associated with single mom homeownership and how to begin your pathway to becoming a homeowner.
Single moms, you can become a homeowner this year! It starts with a plan. We’ve lined it all out for you below.
Myths About Homeownership:
Myth #1: I can’t prepare a budget.
While many single moms are living paycheck to paycheck, oftentimes the cost of rent is higher than what an actual mortgage would be, if a single mom became a homeowner. Further, with a strong budget and action plan for next steps, many single mothers find the process to homeownership much simpler than they once anticipated.
The first step in becoming a homeowner is to create a working budget based on your income and existing debt. This is crucial to understanding the amount of money you can spend on a house note. The simplest way to do this is to take a blank piece of paper and start by writing your monthly take home (net) income at the top. Underneath, list all of your recurring monthly expenses, e.g. rent, car note, child care, cell phone bill, gas, groceries, etc. Total all expenses; then subtract them from your net income. This is a real eye-opening exercise, and allows one to see where the starting point is to eliminating expenses.
Don’t like the paper method? There are a number of free online budget calculators that can also assist with this process.
Much like weight loss often depending on diet, exercise, and measured self-control, sticking to a budget will require planning, perseverance, and self-control. But it will all be worth it, when you receive the keys to your new home.
Myth #2: The process is too lengthy and complicated.
Many mortgage lenders can process a home approval letter in less than 24 hours, once a potential homeowner has found their dream home. Further, the actual loan process can take as little as 14 business days and in general, a maximum of sixty business days.
The critical component to homeownership is in finding a mortgage lender with a lengthy history of ethical lending, a variety of loan products that can fit your needs, and a loan officer with a willingness to education the buyer on the process. Like any new skill set, homeownership is only as scary as the mystery of not understanding its process. Mortgage officers will help walk you through that process.
Note: No money should ever be charged up front to inquire about a mortgage process or get feedback on appropriate next steps to homeownership. If you have chosen a lender that does request money in the initial stages of inquiry, find another lender!
Myth #3: My credit is too bad.
While it is true that credit history is important when exploring homeownership, experience shows us that many potential home buyers think their credit history is much worse than it actually is. That said, we encourage all potential homeowners to take advantage of the free credit report guaranteed by the federal government each year to ascertain where you stand with your credit. Everyone is entitled to a free annual credit report to see exactly what is being reported to the three credit bureaus, Equifax, Experian, and Transunion. This can be done at annualcreditreport.com. All of the other consumer sites that offer free reports are going to give you inaccurate scores and use your personal information for marketing purposes, so don’t use them!
To find out what your FICO scores are, you simply need to contact a mortgage lender and allow them to pull your credit. It does not cost you anything. Further, a credit report pulled by a lender will be an accurate picture of exactly where you stand in regards to purchasing a home. It also allows the lender to evaluate your scores and analyze your credit with you. These reports will allow you to evaluate any inconsistencies or incorrect information that may be on your report that can be repaired, and to at least have a working knowledge of where to start.
Whether your credit is in excellent working order or needs some work, it is important that you understand where to begin to repair it and further understand that no credit report is beyond repair. Many mortgage officers will give you an action plan of things necessary to repair a defective credit history or at least point you in the right direction.
Myth #4: I don’t make enough money.
While it is true that women, statistically, earn less than men, don’t count yourself out! The variety of loan programs currently available give flexibility among lenders on loan products and services that can be offered to a potential client.
In the event, your debt-to-income ratio (a percentage used to calculate your eligibility for a loan) is out of proportion, understand how close or far you are from the gap will help educate you on where you are headed. Further, there are several options to increase your income.
For example, consider picking up a second job for a limited amount of time. While this may be difficult as a single mom, it could be well worth it, if it affords you the opportunity to give your children stability. Additionally, there are many secondary business selling products, e.g. makeup, candles, skincare, that have proven to be quite successful for working mothers. Finally, with the availability of internet and home computers, the list of work from home jobs has expanded exponentially.
Myth #5: I have to save thousands and thousands to become a homeowner.
There are a number of specialty loan programs out there to assist low and moderate-income families in becoming homeowners. And most require only nominal down payments. That said, there will be costs associated with your process, including closing costs (e.g. title, appraisal), inspections, and down payments. So it is important to create a savings plan to build for a future down payment or such incidentals.
Building up your savings account takes time and discipline. It is very easy to spend that savings on going out, nice clothes, and many other things that ultimately leave you not much to show for it. Consider sticking to the 10/10/80 rule. Pay God first. Pay yourself second. Pay your bills third. This says the first 10% of your income goes to tithe to your local church. This is Scriptural in both the Old and New Testament and a best-practice for Believers. The second 10% goes into a savings account. This should not be touched unless you have an actual emergency. The final 80% is what you have left to pay your bills and live off of. This can easily be done, and I have actually had many people come back to tell me they went to 10/20/70 pretty easily as well, which allows you to obviously save even faster.
Myth #6: I don’t have the time to get started on the process.
A homeowner application can often be completed with the ease and convenience of a home computer, at any time, day or night. On average, most applications take less than 15 minutes to complete. Once the application is complete, the lender will contact you within a few business days to give you appropriate next steps, including permission to pull your credit.
Once your credit is pulled, and your score is acceptable, it’s time to look at your loan options. There are many different programs out there with different guidelines, down payment options, income requirements, and debt ratio requirements. A strong mortgage lender will take the time to evaluate all options, explain them, and keep your best interest in mind.
Myth #7: Finding the right house can be difficult.
Select a realtor that will help you find your perfect home! Their job, literally, is to comb the newspapers, websites, and various MLS listings (an internal database they have access to), to find you potential homes that meet your specifications. That’s right. You outline what you want in a home, including price range, number of bedrooms, geographic location, school district, etc. And each home selection process is unique.
Finally, once you have followed all the aforementioned steps and are now pre-approved with a lender, you will be able to notify your realtor of the appropriate price range to search within.
If you are a single mom or know a single mom who is looking to become a homeowner, check out our latest post in our TLSM Video Series! Jeff Maggio joins Jennifer Maggio, founder of The Life of a Single Mom on the couch to give you more details about homeownership in the video above.
Did you know we also offer a variety of **FREE** podcasts and videos covering the core areas that we have found that single moms struggle in the most? We bring special guests on the couch to discuss those hard-hitting topics like Battling Loneliness, Avoiding Burnout for Support Group Leaders, Sex & Dating, Overcoming the Poverty Mindset, and so much more! Follow our video & podcast page and subscribe to our YouTube Channel or the Podcast App and stay up to date!
Don’t forget to visit our website for more at thelifeofasinglemom.com!
Jeff Maggio has been assisting customers in achieving their homeowner dreams for almost two decades. A marathon runner, an avid volunteer, and a strong supporter of single mothers, Jeff has built his career on honesty and crafting personalized solutions for individuals. His portfolio of services, include first-time home buyers, jumbo loans, fixed and adjustable rate mortgages, professional loans, low-to-moderate income lending programs, refinances, construction loans, and condominium purchases. Licensed in all 50 states with Flagstar Bank, an $18 billion bank that was chartered in 1987, Jeff’s reputation precedes him. Feel free to email specific questions you may have and for special discounts, indicate The Life of a Single Mom sent you. You can visit www.jeffmaggio.com to apply or for additional information.
The Life of a Single Mom is a national, faith-based, nonprofit that exists to see that no single mom walks alone. Our primary focus is in helping churches and communities launch single mom’s ministries and have done so more than 1,500 times! Our support groups connect 71,000 single mothers each year to a local church. We are a one-stop shop for all things single mom ministry related. For more information, visit https://thelifeofasinglemom.com.