In a distressed economy, more and more families are turning to rental properties are their first choice in seeking housing. If you are a single parent considering a home purchase, it is important to consider why renting may be better for not only your family finances, but also your short-term and long-term emotional health.
Emotions of House Purchase
Emotional health is not a direct health issue that we associate with home purchasing or housing decisions. But, when a home purchase causes unnecessary stress, there can be chronic emotional health issues that manifest as well. Unfortunately, many single parents do not consider this type of health concern when deciding to purchase a home rather than renting.
Renting to Avoid Home Ownership Expenses
Home repairs, escrow, homeowner’s insurance, and general home maintenance are expenses that are typically not addressed when making the decision to buy a home (Stefan 60). For single parents, however, these are expenses that must be considered when deciding between a rental and a home purchase. By renting a home, single parents can avoid many of these expenses and, therefore, live without unnecessary financial burdens and unnecessary emotional burdens when a home needs an emergency repair or a rise in taxes paid.
Tax Incentive? Maybe Not.
In addition to the emotional health issues to be addressed, renting a home also works to help ensure that you still qualify for great tax incentives as a single parent. While purchasing a home can give you an itemized deduction, if the sum of all of your deductions does not surpass the “head of household” standard deduction, then owning a home will be a mute point for you. Always be sure you address these finances with your personal financial planner as you will often find, in many cases, that renting a home is more advantageous while your children are young.
Like many challenges with family budgets and family finances, owning a home does not always serve to benefit single parent families. For those households with small children, the option to rent a home, or an apartment, may be a more viable option (Stefan 70). When considering home purchase, always consider not only the immediate financial impact, but also how owning a home may adversely impact your long term finances as well as your emotional health.
Sources:
Stefan, Kara. Head of Household: Money Management for Single Parents, Greenwood Pub Group., 2009. Google Books
http://raymondcox.com/emotionalnewhomepurchase.htm
http://www.fhamortgagecenter.com/fha-blog/the-new-tax-benefit-of-buying-a-home/