Home Buying Tips for Single Parents

• Before pitching in to buy a home, make sure that you have a sound financial structure, retirement fund for yourself, term life insurance and a will where you have named the guardian for your children.
• Find a house that costs about two to two and a half times your annual income.
• If you are planning to take a mortgage to buy a home, then you have to make sure that:
• Monthly house payment including property taxes and insurance should not exceed 26% of gross monthly income;
• All monthly debt payments including the house payment should not be more than 38% of gross monthly income; and
• Two to three months' worth of house debt payments in an emergency fund.
• If you have the ability to pay loan, mortgage lenders may be willing to pay you more for the house but you have to be the one to determine your cash flow and the type of house you are comfortable with and stop at that.
• Mutual funds are usually the best investments as the principal and interests are often tax-free.
• Save and invest wisely for the down payment of the house and take the increasing costs of the house, closing costs and an emergency cushion into consideration too.
• To be sure that house really fits into your budget, try to add up the costs of the monthly house payment, child care and long-term goals such as retirement and college and then decide, whether you can go on spending so much for several months or perhaps years in a row.
• Understand that mortgage interest and property taxes are deductible but get the itemized idea about how much deduction you will get. Sometimes, the standard deductions offered for the single parents as head of household and child care expenses are more than the deduction you may get on mortgage and property tax and it will hardly make a difference whether you rent or buy.
• You may also consider sharing house payments and ownership with a relative and split child care and household chores too but you should have really good understanding with the other person or family.