Securing a Home Mortgage Loan with a Disability
If you have a disability and wish to buy your own home, this guide is designed to help you and your family during the process. It will help you confirm that buying your own property is the right decision for you and guide you through the steps of buying a home. You will also learn about the financial assistance available when you have a disability to help you secure home ownership.
Pros and Cons of Home Ownership
While more than 40 million people in the US live with a disability, just a small proportion benefit from home ownership, which promotes greater independence, community involvement and a sense of control.
Independence and Connection to Your Community
The majority of people with disabilities live in group homes, residential care facilities or in their parents' home, where someone else is in charge. However, even if you require a degree of assistance, independence is important and having your own home allows you to take control and responsibility of your life. Beyond independence home ownership allows you to feel part of the community, as you connect with your neighbors and feel a sense of belonging.
Responsibility and Assistance
Financial planning and investing in a home lets you take responsibility for your future, so not only are you prepared, but you feel in control and accomplished. If you need assistance, you can still receive this in your own home and are at the advantage that it can be tailored to your needs and routines rather than that of an institution.
A Big Commitment
Buying your own home is a significant move, particularly when you have disabilities, owing to the greater independence and responsibility required, and the need to make sure that any assistance and services you need are available in your neighborhood. Home ownerships is also more expensive, though financial assistance can help meet your needs.
As there may be additional advantages and disadvantages of home ownership for your given circumstances, you may wish to discuss your decision with a housing counselor. They are based locally in all US states and offer a dedicated service to people with disabilities. You can use your Yellow Pages or telephone directory to locate a housing counselor near you.
Learn About the Process of Buying a Home
Paying for a Home
It is typical to take out a mortgage loan from a bank to borrow money to pay for your home if you do not have sufficient funds to pay the asking price. A mortgage loan works as follows:
- When you put in a mortgage application the bank checks your finances. They assess your annual earnings, predicted expenses and credit history for unpaid debts. With this information the bank will either approve or decline your request to borrow money.
- You often need to make a down payment using your own money, which usually cover 3-10% of the loan's value, though some loans don't require a down payment.
- Your bank will then set out a monthly payment plan that allows you to pay back the money over a 15 or 30 year period. This sets out the principal payment (the overall amount you borrowed) and the interest rate (the percentage of the payment that covers the bank's admin costs and profit), as well as monthly ongoing costs such as your mortgage repayments, taxes, insurance and utility bills.
Making a Mortgage Loan Application
A housing counselor can help you approach a bank to let them know you wish to make a mortgage application to purchase a property. Your bank will then do the following:
- Complete a credit check to make sure your income is sufficient to support a loan.
- Based on your income and outgoings the mortgage officer will calculate the mortgage you can afford.
- Assist you in applying for the agreed loan.
Once the bank approves your mortgage you can start looking for properties that the value of the loan will cover.
Putting in an Offer
A real estate agent will help you find a property that meets your needs and makes contact with the seller for you. If other people are interested in the same property as you, an auction takes place and the home is sold to the highest bidder. Once your home is purchased the real estate agent will assist you with the necessary paper work.
Below is a practical guide for buying a home when you have disabilities.
1. Get Support
As buying a property is often a lengthy process that involves various meetings, decision making and isn't without its frustrations, having family and friends on board to support you is a good idea.
2. Choose a Housing Counselor
Selecting a local HUD approved housing counselor allows you to receive free or low-cost advice on your housing options locally, financial assistance programs and the best solution to fit your practical and financial needs.
3. Determine Your Needs and Your Budget
Establish what you are looking for in a property and what needs you have as a result of your disability. Your housing counselor can help you with this and help set a budget that incorporates the additional costs of any assistance you will require when in your own home.
4. Get Pre-Qualified
Although not always available, approaching a lender to quickly review your finances and estimate the amount you can borrow is helpful, as this mortgage pre- qualification allows you to narrow down your home search based on the loan value.
5. Make an Offer
Your housing counselor and real estate agent can help you find a suitable home on which to make an offer.
6. Apply for a Mortgage
Your housing counselor can help you apply for a mortgage. If you have a low income that does not qualify you for a standard mortgage, they can also guide you on more favorable mortgage programs and additional financial assistance you are entitled to.
7. Arrange a Home Inspection
Even if the property you are interested in has already had a home inspection arranged by the seller, organizing your own not only lets you confirm its value, but also makes sure that the home is accessible for your needs.
8. Close the Deal
Before the property ownership is transferred to you on an agreed date, the lender's closing attorney will contact you and explain how closing the deal will take place and what you need to bring with you.
Understand Your Rights
There are laws and regulations to protect anyone with a disability during the home-buying process, so it is important you know your rights.
Disability Rights in Housing
With a confirmed disability this federal law makes sure that you:
- Cannot be discriminated against, so you cannot face different qualification criteria, terms or costs than anyone else.
- Are accommodated by housing providers, so their services, policies and practices are accessible to you.
- Can make reasonable adjustments to a property to make it safer or aid accessibility, such as grab rails or a lower threshold.
The Fair Housing Act
As well as making sure that your disability does not stand in the way of you obtaining housing, multifamily residences constructed after March 13 1991 must meet various accessibility requirements. This includes an accessible entrance, through routes, common rooms, kitchens and bathrooms, as well as doors that are wide enough for wheelchair users.
Americans with Disabilities Act
Although this law applies to various situations and prohibits discrimination on the ground of disability, it is another law that protects you during the home-buying process.
Gain Financial Assistance
If you have a disability and do not have sufficient income to access a traditional mortgage, financial programs can help make the dream of home ownership a reality.
SSI Disability Programs
To be eligible for the Supplemental Security Income Program, which responds to financial need, you need to meet the criteria outlined here. Their website also provides application forms that you can download and complete after arranging a meeting to assess your requirements and eligibility for support. If your application is approved this may offer you a sufficiently stable income to access a government-backed mortgage and affordable housing.
Home Ownership Voucher Program
This Government housing program allows families with moderate and low-incomes where members also have a disability to buy or rent a property. Eligibility criteria for the Housing and Urban Development's voucher scheme are detailed here. As not all Public Housing Agencies provide home ownership as an option, you will need to research whether this is the case in your local area and even then you will need to find your own property. If eligible you will receive a monthly payment to cover your mortgage costs.
Habitat for Humanity
This non-profit organization builds accessible accommodation for people in financial need and then provides favorable mortgages to allow their purchase, though you must still prove that you can meet repayments. As the scheme relies heavily on volunteers you will be asked to make a contribution to their house building efforts in whatever way you can through sweat equity.
- National Organization on Disability: Improving access to housing is just one of the schemes that NOD runs.
- National Disability Institute: As well as providing housing assistance, NDI has links with various banks and investment businesses.
- American Association for People with Disabilities: One of AAPD's aims is to ensure economic security for anyone living with a disability, which includes greater access to financial bene