Going from Renter to Home Owner
We’ve all done it, we’ve all started out… as a Renter. There is nothing wrong with renting a home, as it actually does have some specific advantages over home ownership… but there’s nothing like being the master of your own palace. Owning a home can mean the difference between painting a room you want to paint, or not. It can mean putting a hole in a wall somewhere, or doing some landscaping, or installing a giant wall-mounted TV and surround sound system in the living room, all without anyone’s permission. Yes, that’s right! As a Renter, your rights to the home are limited, but without a doubt, home-ownership gives you the ultimate level of freedom.
Decide you Want to Buy
Making the decision to buy is just as important as deciding when to buy. While there is a certain freedom that comes with home ownership, there is also a freedom that exists for renters. It’s the freedom to come and go, almost, as you please (given your lease terms), allowing you to leave or move at your discretion, just as long as you aren’t breaking your lease or leaving your landlord hanging.
Start Saving Early
It goes without saying that you should have at least a small nest egg saved up to buy a home. Unless you’re a veteran, eligible for a guaranteed VA home loan, most loans require a minimal downpayment. The days of 100% financing are almost completely gone, and if you’re a serious buyer, you’ll probably want to have at least ten thousand dollars saved up to work with. If you come out having to use less cash than that, consider that a win, but depending on other unknown factors (such as your final loan underwriting) having a few thousand extra on hand could come in very handy if a glitch comes up.
Get a Loan Prequalification First
Aside from saving some money, a Mortgage Lender should be the first actual person you contact well before deciding to buy a home. Most Realtors are generic, but mortgage lenders come in so many different varieties and styles that it’s always a wise choice to comparison shop at least two or three lenders, to see on paper how much the loan costs and how much home you can afford. Different lenders may have different rates and fees, making it one of the first places you should look to save money. Realtors are paid by the seller, so as a buyer, their fee has no impact on you whatsoever. But the savings from one lender to the next can be thousands of dollars difference. And while often un-adhered to, this is my suggested first person to connect with.
Connect with a Realtor
Once you have your loan prequalification, that means you know what you can afford to buy, so find a good “Buyer’s Agent” and obtain their assistance. Don’t worry, as a Buyer, most agent commissions are paid by the seller, so working with your own exclusive Realtor is not only strongly encouraged, it’s free to you! Having your own Buyers Agent helps you avoid common housing pitfalls, gives regular guidance through possibly the single largest purchase of your life, and helps you avoid legal disputes or lawsuits. A good Buyer’s Agent is worth his or her weight in gold and should give you a high perception of trust and dedication in helping you accomplish your home ownership goals. If you don’t know any Mortgage Lenders, as suggested in the previous paragraph, your Realtor may be able to make some recommendations.
Repair Credit if Necessary
So we’re now far enough along in the process to know that you’re prequalified for a loan and you already have your own Buyer’s Realtor helping you shop for homes. But if there’s anything out there waiting, in your credit, that wasn’t initially addressed in your initial loan prequalification, now is the time to settle credit issues: debts, judgments, or anything else that may cause a delay in loan funding as you approach the funding and closing dates. If you know you owe Blockbuster Video $7 from 1998, contact the current debt servicer on your credit report and offer to make a cash settlement for pennies on the dollar. Whatever you do, don’t do nothing if you know something is hanging out there.
Find Home, Make Offer
This part is self explanatory. Look for your new home! Try to follow your Realtor’s advice and don’t start lowballing right out of the gate. Take notes when you look at homes, because, trust me, they blur together easily. When you find the one that’s right, do some diligent research on comps in the area (homes that have sold, homes that are pending sale, and homes that are on the market for sale). Determine what you think is a fair price for the home, and with the guidance of your Realtor and your Mortgage Lender, submit your offer and hope to be accepted. If your first offer gets declined, you can always try again or move on to other properties. Also, homes are always coming and going, so you never know if an even better dream home is coming right around the corner.
Be Prepared for Escrow Delays
Escrows are like pregnancies; meaning they almost never happen on the original planned date. Different, however, escrows rarely close early; they almost always close late. So if you have a 30 day escrow scheduled, plan for 45 days. If you have a 45 day escrow, plan on 60. If you close early, that’s great, but this is the one point in the entire situation where you must have the most fluidity and flexibility in you. Don’t move out of your current rental until you’ve closed, but don’t give your notice too early, because delays happen!
Give your Notice and Move In!
If you haven’t given your notice already, do it now! Try to get out of your rental as soon as possible, perhaps even helping to find a new renter yourself so your landlord doesn’t get stuck with no tenant. Contact the property manager or homeowner early in the process so you can get the best assistance from them as possible. Try very hard to stay on good terms, and communicate with the property manager or homeowner through the whole process. Having open lines of communication will give you the best chance of ending your lease cleanly, and in the time you want and need after closing, so you can conveniently move everything to your new home.
Congratulations on Becoming a Homeowner!
Home Ownership is real and we’ve helped many renters buy homes for sale over the years. We’re here to help you too. If this sounds like something you’d like more information about, contact us using the form at the right, or HERE on our CONTACT US page. As a Real Estate Sales Broker who also specializes in Tri-Cities Property Management, we understand your specific needs and have developed a system for helping Renters become Homeowners and would be glad to work with your towards your dream of home ownership.
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