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Single mothers can become homeowners
After the fall of the housing sector in 2008, many families found themselves without homes. Some opted to later sell their houses, while many more were forced into default. Alternative living accommodations included either co-habiting with parents or renting. Since that time, it has been assumed that living at home with extended families is the better bargain, especially if the down payment on the price of a house was unavailable. This has been the case for many families, but more so for single mothers.
Buying a house is a big splurge, which is why many single mothers wind up moving in with family members or renting. While the goal is to eventually save to buy a home, it is not always the reality. Living on two incomes is difficult, and having to cope with one is stressful. But owning a home does not have to be an abstract mission. Single mothers can own homes with the right planning.
If the goal is to live with extended family members to eventually save for a down payment, many single women find they don’t actually save as much as they had planned. Sometimes it may be due to bad financial planning, not setting realistic goals, or just that the money that was supposed to be saved is unintentionally diverted to other expenses. While the plan was to have more money to save, many find they actually spend more. They may be spared from paying for utilities and rent, but wind up spending elsewhere. In the end, their spending has exceeded what it usually was when they were living alone. This situation can be reversed by drafting a budget and sticking to it. Include in your budget the price you can afford to pay for a home. After estimating your down payment, set aside a particular amount of funds in a separate savings or money market account that will go toward that initial cost. Shop around for an account that offers a high interest rate. Right now, online banks are offering the higher rates. If you’re not ready to bank online, find a national or local bank that offers the best rates.
Depending on how much you can put toward that down payment, single mothers can still afford homes if they adjust their estimates. The ideal arrangement is to pay 20 percent of the price of a home to avoid the Payment Mortgage Insurance homeowners are expected to pay below that percentage. If that is impossible, then the PMI kicks in. You can later eliminate the PMI when you’re eligible to re-finance or put down another large payment toward your mortgage. While homeowners are urgently advised to avoid any extra payments toward a mortgage, in actuality it adds up to just small additional amounts, depending on the price of the house and what your initial outlay is. If you work with a good real estate team, you can adjust the payments to different scenarios and find the right plan to work within your budget.
Another way to save on buying a house is through tax deductions. To be eligible, taxpayers must file a Form 1040 and itemize their deductions. As a homeowner, you can deduct property taxes and the mortgage insurance (PMI). There are conditions to be met, many which are extended to families within an income range http://www.irs.gov/publications/p530/ar02.html#en_US_2013_publink100011834. Talk to your lender or tax preparer to learn whether your payments are tax deductible.
Families that fall within the low income level may be eligible for a federal grant from the U.S. Department of Housing and Urban Development (HUD) http://portal.hud.gov/hudportal/HUD. Every year, the government sets aside a special budget to help the needy become homeowners. Individuals can connect to a counselor who will walk potential buyers through the process. HUD also offers low-cost loans through the Federal Housing Administration. Another option is Habitat for Humanity, which builds homes for families based on their needs. Homeowners use their time and labor to build their homes and their mortgage payments are contributed to building additional houses http://m.habitat.org/default.aspx. It’s important to know that the federal loan grants were implicated in the 2008 housing crisis. There have been major changes made to the programs since then, but buyers should have a solid idea of what they can and can’t afford before signing up for anything.