Build Up Your Credit
Compared to homebuyers, credit requirements for renters are less stringent. Landlords may perform a background check and credit check, and may or may not confirm employment. However, mortgage lenders are known to study each borrower’s financial status with special scrutiny.
Length of employment, salary, tax history, credit history, credit score and other details are all carefully considered for loan applications. People who have rented all their lives and who plan to buy should start cultivating a good credit
history years in advance in order to get the best interest rates for a mortgage.
Use credit cards wisely and pay off the balance at the end of every month. Months before you decide to buy a home, go through your credit report and correct errors.
Think About the Future
Buying a home requires commitment. When thinking about purchasing a home, renters will need to think well into the future to ensure long-term happiness. A renter who has made the decision to buy a home should think long and hard about long-term goals before deciding how large the home should be, where it should be located and what kind of amenities the property should have.
Create a Budget
The cost of homeownership is far more complicated than that of renting an apartment. Whereas apartment dwellers only pay rent, homeowners must take into account the cost of home repair, property taxes, homeowner’s insurance and, for some loans, mortgage insurance. Renters who would like to buy a home are encouraged to establish a detailed budget to ensure that they can handle the cost of buying vs. renting.
Get Handy Quickly
Some apartment renters know little or nothing about fixing a leaky faucet, replacing a light fixture, unclogging a drain and other basic home repairs. Being able to do these things for yourself will become a big money saver after buying a home. Buy a set of tools and read home improvement/DIY resources and guides to expand your skills. This will give you greater confidence when it’s time to start fixing your own house.
Develop a Green Thumb
Most houses come with yards that need to be watered, trimmed and maintained throughout the year. The best way for an apartment dweller to get used to maintaining a lawn is to care for plants in the apartment. Getting a sense of how much light, how much water and when to trim or not can help you take good care of your lawn when its time.
Think About Your Down Payment
Whereas most renters need only need a deposit and first month’s rent, the down payment for a home can be a significant upfront cost. Renters who have not saved for a down payment are therefore encouraged to start saving as soon as possible. Don’t forget that the down payment isn’t the only upfront cost incurred when buying a home. In addition to the down payment, buyers must also produce closing costs, which can amount to as much as 5% of the cost of the home.
Fortunately, there are ways around some of these costs. FHA loans require as little as 3.5% down payment, and your real estate agent may also be able to negotiate some your closing costs to be covered by the seller. These details can be ironed out when you start searching for a home. Work with your agent and mortgage lender to determine what is realistic for your needs.
For more information contact your REALTOR(R)/Agent Owner here.