Moving on from Renting to Owning a Home
All your life you've been renting and you've recently reached a point in your life where you've begun to think about how nice it would be to own your own home. After some realistic consideration and a look at the money factor, you've decided to take the plunge and get serious about buying a house.
Where to Start?
To begin your transition from renting to owning, it's important to examine your finances. Do you have enough money put aside to be able to make a down payment? It's also a good idea to meet with lenders or at the very least pull up an online mortgage calculator and try to evaluate what you can afford as a monthly mortgage payment. You'll not only have to consider mortgage payments, but also taxes, insurance, and if you don't have 20 percent of the purchase price to put down as initial payment and if you are going for a conventional mortgage, you will need private mortgage insurance (PMI). Don't forget closing fees, these can sometimes cost upwards of $10,000 or more, depending on the terms of the sale. Often the seller picks it up, but other times these fees fall to the responsibility of the buyer (or can be a split between the two parties).
Once you figure out what you can afford, you'll also have to make sure you'll qualify for a mortgage. This is a good time to pursue getting pre-approved for a loan.
The Long-Term Financial Picture
Once you examine the above factors, ask yourself if your monthly income can meet these both the initial investments and the subsequent monthly expenses. Consider property taxes, utilities and homeowner's insurance in your expenses. While you may have paid some utilities when renting, running a home is typically more expensive, keep this in mind when figuring your long-term and recurring expenses. It's also important to calculate these factors so you get a better idea of what price range you should be looking at; just because a lender may qualify you for a higher amount, doesn't necessarily mean you can afford to buy in this range.
Hire a Professional
After you get a target price range to shoot for when looking at homes, it's time to get down to business. You can try to go it alone, but it's a good idea to hire an experienced real estate agent to help you in your quest to buy your first home. There are many factors to consider when looking at houses, including but not limited to the eventual appointments and contractual work to come later during the transaction. A good agent will walk you through each step â”€ one at a time. Some people are hesitant to go with an agent because they feel the sellers may not negotiate on the price because they have to pay commission fees. Don't worry, the listing agents usually calculate this in before the home is even put on the market and your agent representative typically won't charge you a cent, any commission earned will be coming from the seller. Later on, when all is said and done, you'll be happy you didn't do this solo. In 2012, according to the National Association of Realtors, 88 percent of buyers worked with a real estate professional1.
There will be a lot of other decisions during the process, such as the type of home you want to buy and what region you want to settle in. Many people start the purchase process not knowing, but an agent can interview you and help guide the way to finding the home of your dreams.
So you've found your dream home, purchased it and moving day has finally arrived! The very idea of owning something probably makes you feel giddy, but at the same time you might be surprised to find out you are experiencing a bit of anxiety too. Owning a home is a big responsibility and a huge transition.
Once you make the commitment to purchase a home, the realization will begin to hit; long gone are the days you can pick up the phone to call maintenance or your landlord and request them to come resolve any problems or make repairs. Now it's up to you to either fix and/or pay for anything that breaks. This transition may be difficult enough to be considered somewhat of a culture shock. Don't worry, these apprehensive feelings will pass and before you know it, you'll become more settled in your home and grow into your new homeowner role. Sure there will undoubtedly be a few bumps along the way, but as you become more knowledgeable and experienced, these will become second nature and you'll learn to problem solve issues that crop up.
Making the transition from renter to owner takes a bit of time, but can be well worth the investment.