Friday, December 8, 2017

Raise Your Children in a Home, not an Apartment

While the value of home ownership as a way of building wealth over time for either single parents or two parent families is well accepted, hardly mentioned is the value of home ownership on the cognitive and behavioral outcomes of the household's young children.

Homeownership and Child Outcomes
In a recent study on the impact of home ownership on child outcomes, while controlling for the child's gender and health, number of siblings, and characteristics of the household's locality, has indicated that the impact on a child's cognitive outcomes is up to 9% higher in math achievement and 7% higher in reading achievement for children living in owned homes. 

Moreover, it is found that the measure of child behavior problems is up to 3% lower if the child resides in a owned home. The result concludes that these youth's greater cognitive abilities and fewer behavior problems will result in higher educational attainment, greater future earnings, and a reduced tendency to engage in deviant behaviors.

Steps to Becoming a Homeowner

If you are a single parent with the responsibility of raising your children without the help of a spouse, the home environment is even more significant. Although, renting an apartment might be your only current alternative, it would be wise for you to begin taking the necessary steps towards becoming a homeowner.

In recent years, the criteria for acquiring a mortgage has become less restrictive. Even though the 30-year interest rate continues to be at an all-time low, unless you apply for a FHA mortgage in which the down payment is 3.5%, you will have to have a down payment of about 5%. And, in addition to the down payment, your middle score on your credit report has to be at least 620.

Planning for A Mortgage
Consequently, even though the 30-year interest rate is still at an all-time low (currently approximately 4.5% nationwide), home ownership is down because of the down payment and credit score requirements. Planning ahead has to include both saving consistently to build up the down payment as well as a careful review of your credit report with the goal of getting your middle score up to at least 620 or above. 

Nevertheless, with a FHA loan and a down payment of 3.5%, your monthly mortgage payment on a $125,000 home would be $611.19. Compare that with your rent payment as well as another mortgage payment scenario. Recently many conventional mortgages have began offering programs with only 3% down. 

Many landlords now looking to rent their apartments have discovered the need to be receptive to an applicant with a lower credit score due to the shaky job market and the realization that many applicants are losing their homes to foreclosure. 

If you are currently renting, use the time remaining on your lease to take the steps mentioned earlier. In my opinion, renting should be only temporary and out of necessity. For a single parent, the overwhelming value to yourself and your children is to be a homeowner.

Call (773) 614-3201 or e-mail me at for a free consultation.

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