Wednesday, February 23, 2022 / by Brian Armstrong
From Renting to Homeownership Are you considering buying a home and saying bon voyage to renting? Becoming a homeowner signifies a major shift in your life as this will be the first time you will be your landlord! Not only that, but owning a home allows you to build financial wealth for yourself where in the past you were building for someone else. As you weigh your decisions, it is important to do your homework so can be confident you are making the best decision for your future!
No Need to Rush
The first thing to know about purchasing a home is that it is not a quick process. Homebuying is one of the largest purchases we make in life, and doing your due diligence is an essential part of the decision-making process. You will have many choices to make along the way and don’t expect to just find a home the same way you have an apartment. From the location and of potential homes to mortgage lenders there is a lot to consider Homeownership is less flexible than renting, so you will want to make sure that you will be happy with your home long term. As you plan to make this transition use this time to take care of a few financial things.
1. Credit Score: Borrowers with higher credit scores have more lending options available to them. Depending on your current rent setup, your rent payments may even help you build your credit score!
2. Down Payment: To qualify for a loan, many lenders require some form of down payment. Start saving so that you can put down a decent chunk of the purchase price which will help you lower your monthly payments. As a first-time buyer, you may be eligible for an FHA loan with as little as 3.5% down.
Once you are ready to make the dive into homeownership the first thing you need to do is look at your finances. You make have the cash to buy a home outright, but most first-time buyers need a mortgage which is a loan to purchase or maintain a home, land, or other types of real estate. Unlike renting, a lender will look at your finances and give you a home value that you are preapproved for, meaning they will loan you the money for a home that does not exceed a certain value. Once you are preapproved for a home, you are now ready to search for homes within your limit. Once you are approved hire a realtor you trust, and they will help walk you through the process of being a first-time homebuyer. Their knowledge of the market, the many moving parts in the process, and experience negotiating deals will help you make informed decisions.
Understand The Financial Differences
As a renter, you have a pretty good grasp of your overall housing costs. You pay a security deposit upfront, monthly rent and utilities, and pretty much everything else is picked up by the landlord. When you own a home, you are responsible for other expenses like your mortgage, taxes on the property, association fees, and maintenance to keep your home in good shape. While you may be used to having the dishwasher fixed by your landlord when it’s not working, this will now fall on you to repair as the homeowner. Remember, while you may have more responsibility, your mortgage payments are helping you build wealth where your rent payments helped your landlord build their wealth.
Your Home, Your Choices
One of the best parts of owning a home is the overall freedom you earn. Your living space is now yours, and you are no longer beholden to a landlord. No more worrying about your landlord raising the rent or even selling your building. Many renting situations also have limits on how you can modify the space to make it your own. As a homeowner, you have the option to deck out your home how your please! Want to renovate the kitchen and repaint the bedrooms? You can customize your space to truly have it reflect your lifestyle and personality.
Want to take a deeper dive on how to get started with your first home purchase? Call 802-735-2167 or send us an email at email@example.com and connect with one of our local real estate experts today!