Top 3 Ways for Same Sex Couples to finance a Home Purchase

There are several ways that same sex couples can finance a home purchase including traditional mortgage lenders and possible other options. Following are the top 3 ways for same sex couples to finance a home.

images1. The U.S. Finance and Administration, FHA, is a division of the U.S. Department of Housing and Urban Development, HUD. Because discrimination based on marital status is prohibited, it makes no difference if you are married or not when applying for a loan. Federal law also prohibits FHA from considering sexual orientation or gender identity of loan applicants.

FHA insures loans so that qualified lenders can offer you easy qualifying and low closing costs on your new home. FHA requires a down payment of 3.5 percent of the purchase price, well below the percentage that must be paid with most traditional mortgages.

FHA does not actually make loans; it is an insurance fund that guarantees loans so lenders can offer good terms to home buyers. Since each FHA approved lender sets its own interest rates and costs, it would be wise to check with several lenders to find the best rates possible.

For more information on FHA loans, you should contact your gay realtor for a referral to a gay friendly FHA qualifying lender.

2. The Veteran’s Administration, VA, offers guaranteed loans to veterans. The VA does not make loans. Like the FHA, the VA insures loans made by approved lenders. If you or your partner is a veteran, you could qualify for a lower interest rate loan.

Unmarried same sex partners may apply for a joint loan, but the VA will only guarantee approximately 40 percent of the total loan if only one of you is a veteran. If you are married, it is likely that you will quality for a VA loan unless you live in a state that does not recognize same sex marriages. The Veteran’s Administration is evaluating those applications on a case-by-case basis.

Generally, obtaining a VA loan allows lenders to mortgage your new home with no down payment and negotiable interest rates. Closing costs are comparable or lower than traditional mortgages and you may be able to finance VA’s funding fee in the mortgage.

For more information on VA loans, you should contact your gay realtor for a referral to a VA qualifying lender.

3. Seller financing is available on some homes. When a seller finances the home, there is no need to apply for a mortgage from a traditional or other type lender. You will sign a promissory note and make your payments, including interest, directly to the seller. If you live in a state, such as California, that has enacted anti-discrimination laws because of sexual orientation or sexual identity, the seller would be forced to sell to you if you meet his qualifications including down payment and credit worthiness.

The benefits of seller financing include no lender origination or other fees and there is no need to worry about strict mortgage lender requirements. Since the terms are negotiated between you and the seller, you may end up with a lower down payment and interest rate than you would with a traditional mortgage.

If you are interested in purchasing a seller financed home, you should check the laws in your state to ensure that you cannot be discriminated against.

In addition to the above, many states offer mortgage assistance programs. For example, MaineHousing’s First Home Program offers low fixed rate mortgages. You should check with your state government to find out what options are available in your area.

A great way to get started is to contact a top gay realtor at GayRealEstate.com. The Nation’s Oldest and Largest Gay Realtor Directory. No Cost or Obligation to find the Perfect Agent.

The difference between pre-qual. and preapproved for mortgage.

Many LGBT real estate buyers and gays and lesbians borrowing a mortgage to finance or refinance a home want to know the difference between a prequalified and a preapproved loan. On the surface they sound quite similar, but in practice they have significant differences that relate to the level of commitment a lender is making to the LGBT borrower.

 

  • The big difference is that prequalification has to do with the process a lender goes through to find out if a gay real estate buyer is eligible for a mortgage. This typically means that the lender will check the credit rating of the LGBT mortgage borrower and ask for a few financial details. Gay and lesbian real estate buyers who meet basic criteria for borrowing will be considered prequalified – which means they essentially qualify for making a loan application.

 

  • But in no way does prequalification represent a legal commitment on behalf of the lender to actually loan money. It is no guarantee that the LGBT borrower will get the loan, it is more like a prediction that the gay borrower will succeed in getting a loan once they make an official loan application.

 

  • In other words, prequalification is a screening or filtering process to weed out those LGBT borrowers who don’t have a chance of qualifying for a loan. Without loan prequalification it is too easy to assume that a loan is forthcoming, and that misleads the LGBT real estate buyer by giving them false hope. It is also a waste of time for the lender, who wants to concentrate instead on those LGBT mortgage borrowers who do qualify and will eventually have a realistic chance of getting a loan.

 

  • Preapproval, on the other hand, is a status that represents a much bigger commitment by the lender. For a gay or lesbian home buyer to go through the necessary steps of getting preapproved, they basically have to do all the documentation of income, assets, and credit that is involved in a full blown mortgage application process.

 

  • If they pass all of the standards set by the lender, then the lender makes a firm commitment to providing a loan – and the lender specifies exactly how much the LGBT home buyer can borrow.

 

  • Armed with that information the LGBT buyer can then go with a gay-friendly Realtor to shop for homes in that price range and negotiate with sellers from a position of strength. Since the seller can see a lender-signed letter of loan preapproval, that lets them know that the potential gay or lesbian buyer really does have the financial means to purchase.

To learn more about LGBT mortgages and how gay and lesbian real estate buyers can get preapproved or prequalified for a loan from a LGBT or gay-friendly mortgage company, check out the informative articles and resources at GayRealEstate.com. The site has everything a LGBT borrower needs to find a loan and a home, and it maintains the largest database of LGBT Realtors and gay-friendly real estate agents in the world.