An Extensive Guide For Moving From Renting to Homeownership
A house is the most expensive asset most of us will ever buy. Typically, it involves years of hard work, investment, and some pretty deep life choices. It goes without saying that jumping from renting to owning is as tempting as it is frightening. We’ve elaborated this guide: such a huge step should never be taken alone, much less uninformed.
Making the Right Move
The housing market may look hostile, but buying a home is still one of the most solid investments one can make. However, miscalculating the steps between renting and buying can land you in some serious financial troubles. Luckily, the reasons for not buying a home are pretty straightforward.
Lack of funds or a low credit score should stop you before you even start, under the risk of making your financial situation worse. Even if you do have funds, it may not be the right moment if you need flexibility. Buying a home usually involves settling down for a while.
So, if you’re planning to move to another place soon to work or study, it might not be the right moment for such an investment unless you’re planning to become a landlord. If you feel it isn’t the right moment yet, get the best renting tips from UMoveFree.
A Hybrid Solution
Rent-to-own homes or lease-to-own homes are becoming a popular alternative for those who can’t afford the upfront costs of buying a house. In this type of agreement, renters agree to rent a home for a specific period, during which every rent counts towards the house price. At the end of this period, usually five years, renters can choose to pay for the difference or move out.
If you’re determined to become a homeowner, here are some steps you’ll have to take to make the process smoother. Please read them with care.
A high credit score will make your life easier when shopping for mortgage options. Try to improve your credit score as much as you can in order to strike better deals. Most loan institutions will be looking for a credit score above 580 and in some cases, above 620.
Lenders will assess your ability to pay your mortgage by analyzing your income and employment status. Stability is quite important here, and most lenders will favor those with more than two years in the same job.
Be ready to cover the upfront costs of buying a house. Lenders will look at you with more favorable eyes if you show that you have at least 20% of the house’s value to start the conversation. There are deals with lower percentages, though they typically involve other costs, such as private mortgage insurance (PMI).
Choose Your Place
Buying a home is a long-term decision, so choosing where to live is as important as the house itself. Consider the distance to work, school, and the city center. Check if the neighborhood is dangerous or noisy. Above all, really try to imagine yourself living there and see how it feels.
Getting the Key
Buying a house isn’t as easy as grocery shopping, but it’s still a pretty attainable goal if carefully planned. Plan ahead of your decisions, and don’t hesitate to look for professional help whenever you feel overwhelmed by the task.