We are hoping to schedule our home study as soon as possible but were curious about what they look for regarding credit reports, debt and financials. I have been a stay at home mom for 5 years so we do not have a lot of extra money saved. The only way we are actually going to afford the adoption is through the tax credit and a reimbursement from my husband's employer which makes the adoption process FREE. My father will loan us some money and we will use credit cards or a loan for the rest. Our credit score is above average, no late payments just a good amount of debt and student loans. Can anyone give me some details on what matters most financially? Also should we try to not use the credit cards until after the home study? Kind of feel this is the ONLY thing keeping us from our dream.... TIA
Hi, The federal government requires that you be 125 % above the poverty line for a family of your size (I suspect you easily exceed this level). But agencies vary in what they expect financially from parents, so I really think you should address this question to your agency if you want to know what they expect. I suspect that most agencies don't care all that much how you come up with the money. That being said, many adoptive parents will have experienced the stress of unanticipated expenses both during and after international adoption, so you might get in touch with people who have adopted recently from the country of your choice through your agency. For instance, Russian adoptions are far more expensive than agency costs due to the travel and lodging expenses incurred on the 3 trips most parents need to take.
We have some debt, but they were more interested in our monthly budget and how we intend to pay our monthly expenses (plus new baby expenses) while still paying down our debt.
One tip. . .when making your adoption budget, be sure to include all of the "extra" costs that we did not necessarily know would be ours outside of agency fees when we first started this process. We have a wonderful SW who prepared us, but it did result in our needing to rework our adoption budget and lower the amount we could afford in agency fees without taking on more debt. And let's face it, kids cost enough with diapers and clothes and formula etc. without going into this with added debt! :arrow:
For one thing, the costs of getting all of the stuff done for the home study--some tests we needed for the medical reports were not typicial annual checkup sorts of things(for example, we had to have a syphilis test??) so we had to pay out of pocket. We had to have two sets of fingerprints, and I think I should own stock in FedEx/Kinko's by now for all of the copies I've had to make of things! In addition, we've ordered and sent multiple copies of our profile, we have to pay a lawyer separately to finalize the adoption in our state after placement (our agency expenses cover the legal work in the state where the baby is born/TPR but not finalization), and we'll have travel expenses as well. Be sure you know up front what your agency fees cover, and what will be left for you.
Good luck to you!
Our agency was looking to see that we had the means to pay the fees along the way, whether through savings or borrowing, and that our monthly balance sheet could support another child.
And a warning about the adoption tax credit. I believe the increased credit (somewhere around $13K I think) is good through 2011. Unless it is extended again, it will revert back to $5K in 2012. I'm crossing my fingers that they go ahead and extend it again. Maybe it will be part of the tax issues that Congress is supposedly about to take up.
Good luck.
Some homestudy agencies pull credit reports and some don't.
Agencies will ask you to document your income through pay stubs, 1099s, etc. They may ask for an employment history, with salary indicated, so that they can determine stability of income.
They will also ask for proof that you have a home (such as a lease or mortgage agreement), and what you pay on your mortgage or rent.
You will be asked to document how much you have in all of your bank and investment accounts, including 401(k) and IRA plans. This can include the "savings" part of whole life insurance policies, but not term life insurance (which does not develop a savings component).
You will be asked about other big assets, such as second homes, rental properties, cars, and boats.
You will then be asked to itemize how much you owe in all forms of debt -- credit cards, mortgages, back taxes, car/boat loans, store charge cards, medical bills, legal fees, personal loans, and so on.
They will probably want to know if you have health insurance and whether it is a group or individual policy. A group policy is preferable in terms of adding a child, since federal law requires group policies to accept adopted children without any discrimination on the basis of pre-existing conditions, known or unknown at the time of adoption, and also requires coverage from the date of adoption or placement for adoption, with no waiting periods. Only a few states have laws giving the same protections to people with individual policies.
They may or may not ask if you have had a bankruptcy and, if so, when it was discharged.
They will be looking to see whether your income is satisfactory in terms of the foreign country from which you plan to adopt. They will also be assessing it in terms of whether it is reasonable for your geographic area. As an example, $75,000 may be quite a good income in some areas, but barely enough to let you live in a broom closet in some large cities.
More importantly, they will be looking at whether you can support the amount of debt you have, given your income, and whether you will have enough "left over" to support a child and deal with emergencies.
You will be asked how you propose to fund your adoption. Agencies will want to be sure that you won't have to bail out halfway through the process because you can't afford to proceed, and they will want to be sure that you understand all of the costs that will be involved in adoption from a particular country. (Some folks are remarkably unrealistic or uninformed, when they start out.) Some agencies are "friendly" towards people who fundraise or take loans from relatives; on the other hand, there are agencies that prefer you to fund a higher proportion of your adoption from savings.
Other requests are all over the map -- whether you have life insurance and how much, for example, or what you will do if you have an argument with your parents, who own the guest cottage you are occupying at below-market rent, and you have to move elsewhere. One possible question will be how you will cope if your husband loses his job and doesn't find another one for several months. Will you have enough savings to pay your rent or mortgage, put food on the table, keep health insurance going, and pay creditors?
The best thing to do is to talk to some homestudy agencies before signing up with any. Raise the questions that are most important to you. As an example, you might ask if they have any hard and fast rules about how much debt is "too much", as a percentage of your income, as long as you are paying your bills on time.
Remember that homestudy agencies WANT to approve you, because they want parentless children to find permanent, loving homes. However, they also want you to go into adoption with a realistic view of things -- both the cost of adoption and, more importantly, the cost of raising a child, and especially a child who may have previously unrecognized physical, mental, emotional, or other challenges.