How Moms and Dads Can Manage Their Mortgage Successfully
Tuesday, October 13, 2020, 6:00 AM | Leave Comment
Raising a family and managing mortgage payments are aspects of life that go hand in hand for many Americans.
The prospect of home ownership is still one of the pillars of the so-called American Dream, and the majority of homeowners carry a mortgage or two in order to finance this dream.
For borrowers who do not have children, managing a mortgage can be thought of as making rent payments while building equity.
For moms and dads, effective mortgage management can make a significant difference in terms of how much money they can end up with at the end of the month.
With all this in mind, here are some important aspects of financial management that mortgage borrowers should consider:
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Build up Cash Reserves
In the wake of the global financial crisis of 2008, many mortgage lenders imposed reserve requirements on applicants. In some cases, these requirements are equivalent to three months’ worth of principal and interest payments plus homeowners insurance, property taxes, and utilities. If you have to access this cash reserve after closing, be sure to replenish it as soon as possible.
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Adult Children Can Help with Jumbo Mortgages
When it comes to purchasing luxury homes, most prospective buyers will need to obtain a jumbo mortgage. While these unconventional mortgage loans often carry strict income requirements, they can also offer a certain degree of flexibility that varies from one lender to the other.
In 2016, for example, the Wall Street Journal reported on a residential lender that allowed a couple to bring their adult children as co-signers on a jumbo loan. Even though the parents had adequate income from their restaurant business in Manhattan, documentation fell short of guidelines, and the deal was finally structured as an investment property with the parents making rent payments equivalent to principal, interest, and escrow funds.
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Single Parents Can Apply for FHA Loans
The reality of life for many single parents is that things can suddenly change at the drop of a hat; for this reason, the prospect of falling behind on payments should not only be kept in mind but also mitigated. FHA loans have many advantages, and one of them is that they offer greater protections against foreclosure compared to other mortgages.
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Working with the Right Mortgage Broker
You would be surprised at how many financial assistance programs are available to prospective home buyers in various communities. If your down payment or credit scores are insufficient to move into the home of your dreams, your broker should be able to research special programs you may qualify for.
In the end, parents should work closely with their mortgage brokers and financial planners to find the right home financing plans that fits their lifestyles and family goals.
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Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on twitter and Facebook.
