Adoptions can be expensive and difficult to afford, but fortunately, there are many different methods for raising money to pay for the adoption process. The least obvious method of payment is using a home equity loan or line of credit to make up the difference between income and expenses like attorney fees and agency costs.
Whether you use an attorney or go through an adoption facilitator, all adoptions cost money; it’s just a matter of how much money you will need. Some people think that only couples struggling financially should consider this option, while others see it as preferable to making monthly payments on large amounts of debt over several years (i.e., credit card loans and second mortgages).
To get started with this plan, you need to do some homework. First, find out how much money you will need throughout the process.
Next, create a realistic budget for your adoption. Get everything together that relates to your potential expenses: credit card statements, mortgage information (if you are buying another home), car loans (include payment amounts and due dates), student loans, medical bills––anything that you pay regularly or at least once per year.
You want to know what your monthly obligations are so that you don’t run into trouble paying the adoption bills after the baby comes home. If possible, include all of these expense numbers in an Excel spreadsheet so they’re easy to read and compare with each other.
Home Equity Loan Qualifications
To qualify for the home equity loan, you just need to have equity in your home. If the price of your home isn’t increasing, think of all the things that are adding value to it: perhaps a new roof, an updated kitchen or bathroom, windows replaced, new landscaping.
You can even include future expenses if you have already taken them into consideration with homeowners insurance or an inspection/appraisal for renovations you plan on doing in the future.
All those things combined suggest that your home is worth more than what you owe and therefore should result in “equity” (the amount of money left over after what you owe).
If there’s equity and you want to borrow against it, go ahead and look into the specifics of how much money could be used as collateral for your loan.
A home equity loan can be especially helpful if you are looking to fund your entire adoption through Adoption Finance, with no third-party involvement.
It lets you borrow the money at a fixed interest rate for a set amount of time.
You’ll pay back monthly installments, usually over five years or less depending on your individual arrangement.
Additionally, some lenders allow the money to be paid back early without penalties which can help make up for any extra costs incurred.
Every company will have its own requirements on approval, and on what they’re willing to loan money on.
It’s definitely a good idea to talk through the whole process with your lender before you start looking at any children.
If you are interested in pursuing adoption through private agencies or attorneys, it is possible that the amount of money needed for your specific adoption may be well outside of your home equity line limits.
That’s why it’s important to be well educated on your current financial situation and to understand your limits. You don’t want any surprises later on.
And always remember to prepare yourself for those extra costs that may arise, as they sometimes do in adoption.
It is a good idea to have a basic understanding of the home-equity loan arena, but you should also talk with a few lenders before proceeding beyond this point.
And keep in mind that all lenders will not provide home equity loans for charitable or nonprofit organizations.
It is common practice among most companies to charge origination fees and closing costs of 0.5 percent for home-equity lines of credit up to $100,000, and 1 percent amounts over $100,000. In addition, there might be appraisal charges from 50-250 per closed depending on your state law requirements.
With all these factors in mind, you can see the pros and cons of using home equity loans for adoption. For those of us that like to shop around before we buy, this makes for a good time to talk with more than one company and compare loan terms.
There are several companies out there willing to work with those who want to help children in need by providing them loans at reasonable rates.
Just be sure you do your homework first so you will not have any unpleasant surprises along the way.