Four Tips to Getting a Mortgage as a Single Parent Doing it All On Your Own
Single parent homes make up nearly 21% of the total number of census families in Penticton BC. But while you share that distinction with almost 2000 other households in the city you certainly feel alone from time to time. You have a world of responsibilities on your shoulders, juggling financial concerns the size of bowling balls. That said, you won’t let anything get in the way of providing for your kids, including home ownership. With mortgage rates at all-time lows and the buyers market heating up like a hot August afternoon you want to capitalize on an unmatched opportunity. However, you’re wondering if lenders will look at you differently than dual-parent households that are also entering the market. Don’t worry, because homeownership is much closer than you think. Below is what you need to know
1. Getting a Down-Payment in the Local Market
It won’t matter to lenders what your Facebook relationship status is if you can get a down-payment of 20 percent (or more). If this is viable you will apply for a conventional mortgage. In markets such as Vancouver or Toronto that can be a real problem for single parents, as medium home prices are through the roof of single detached homes and condos alike. It’s for this very reason that many single parents look to the BC Southern Interior as a place to call home. The average price of a single detached home in Penticton is listed at just over $520,000. According to BC Assessment, multi-family units, such as townhouses and apartments, average just $291,000, while the the Okanagan Mainline Real Estate Board (OMREB) states that townhouse prices in 2021 hover at $419,000 while condos are also very affordable at $344,000. These values make getting a down-payment more realistic when compared to other highly desired family communities in BC and Canada as a whole.
While getting that 20% may be a challenge for a single detached home, it has become quite trendy for families (of all sizes) to switch from the hassles of house ownership towards townhouse and condos. Not only are the latter less expensive, they are mush easier to maintain. As a single parent you need as much convenience as possible!
If you’re simply not able to secure a 20 percent down-payment, you will be looking at a high-ratio mortgage, which typically requires mortgage default insurance. This will add to your overall cost, but again, this is Penticton we’re talking about. The difference can be negligible when compared to what you’ll pay in the big city.
With the right plan (more on this below) and a solid credit score you can make nearly any situation work, but getting that 20 percent will go a long way to amassing peace of mind for yourself and lenders. Regardless, if you can put together a strong case for your current and prospective income, lenders may still consider you to be an attractive investment, even when your down-payment is 10 or even just 5 percent of the home’s value.
2. Representing Your Income
Go ahead and be hawkish when representing your monthly/annual income. For starters, report the full amount for what you’re receiving on your child support (as applicable), and secure documented proof of ongoing payments. It must be legally filed to be counted as income to lenders.
In addition, consider all other sources of income beyond your base wage/salary. For many professionals this may include commissions, bonuses, and tips. You may be tempted to downplay these sources of income in favor of a more consistent payment coming from the B.C. Child Opportunity Benefit (which replaced the B.C. Early Childhood Tax Benefit in 2020) but if you have a mortgage in mind you want to provide the most accurate representation of your income as possible. So not only claim, aim for those bonuses, commissions, and tips like never before!
We’ve also seen a big trend among single parents who have taken advantage of the “downtime” of 2020-21 to launch their own side businesses by leveraging eCommerce platforms such as Etsy, eBay, and etcetera. We won’t digress beyond that, but the point is that we encourage you to look at all forms of revenue streams. When lenders see someone consistently hit those supplementary income marks, they see a consistent addition to base income, and may be more likely to finance a home purchase.
Here is a general list of what counts as income towards a mortgage:
Salary/wages
Commissions/Bonuses
Tips (servers, stylists, etc.)
Self-employed income
Rental property income
Investment income (dividends, etc.)
Alimony and/or child support
Pension
Canada Child Tax Benefit (CCB)
Program assistance
3. When to Go After the Mortgage
Even with your ducks in a row, it doesn’t mean its prime time to enter into a mortgage. You will want to monitor developments in the BC Southern Interior real estate market closely. The good news, is that if you’re reading this here in 2021, you’ve stumbled upon the hottest buyers market in recent history.
Over the past 18-month the Bank of Canada has been keeping its prime interest rate steady. This, along with a relatively low bond yield, has resulted in extremely low variable and 5-year fixed mortgage rates. For the 5-year fixed, we’re talking the low (and in some cases under) 2-percent mark, even amongst big banks such as RBC, BMO, and TD. Over a year ago these big banks were bragging about rates as low as 3.74 percent – which now seems costly! Not a fan of the fixed mortgage rate concept? You’ll be pleased to know that variable rates have also dropped to provide single parents with multiple options.
Subscribe to the Carloni Report to keep up to date with Penticton and Okanagan mortgage rates.
And as detailed above, home values in Penticton remain favorable. That said, a hot market eventually leads to a rise in prices. Right now (Spring 2021) the value of detached homes is rising 22%, with prices on townhouse and condos rising too. There is still time to act – but do lock in and get pre-approved for a mortgage today. Further good news, is that if you do lock in and buy a home, you will be entering into an investment that will pay off significantly as values of Penticton properties are expected to keep rising into the future.
4. Find a Partner in a Mortgage Broker
You’re a proud, strong, and independent single parent. But that doesn’t mean you couldn’t use a helping hand when it comes to major life decisions. If getting a mortgage as a single parent, a mortgage broker is the partner you’ve been waiting for. A reputable broker will take on the weight of the responsibilities. They will assist with calculations, pre-approvals, and will connect you to preferred lenders (not always the big banks!) with more favorable (and unadvertised) rates. They will help you cut through the red tape, and can even introduce you to supplementary solutions (mortgage insurance, etc.) that will complete the picture on your new home purchase. Most of all, they will be someone to lean on through the entire process so that you can focus on the most important thing – finding a dream home for you and your child/children. Carloni Mortgage Brokers is that partner. We want your biggest stress to be about picking paint colors for your child’s room and nothing more!
If you live in (or are moving to) Penticton or the BC Southern Interior, let’s make it happen – contact Rene Carloni today at 250.493.9111 today to get started.
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