After years of renting your home, you’ve finally decided that it’s time for your family to begin the process to buy a home. If you have rented for a length of time, there are quite a few changes coming your way. As your Realtor, I am here to help you with that process. Here are a few things that you will need to be aware of…
Get Your Credit in Check
Have you seen those commercials on TV lately talking people who don’t know their credit score? They may be advertising a particular product, but the thought behind the ads- knowing your credit score- is one that you need to be aware of. To get a mortgage, banks require a certain credit score. The higher your score is, you have lower interest rates available to you, thus saving thousands of dollars over the term of your loan. Get a credit report now, before you start looking. Correct any discrepancies in the report, and work to lower any high balances you may have. Always make sure to pay your accounts on time, even paying 30 days late will ding your credit.
I know it’s tempting, but I recommend not looking at property until you have your financials in order and getting pre-approved for a mortgage company. Meet with your bank or mortgage officer to see what mortgages and rates you qualify for, and the maximum loan amount you qualify for. Adding that loan amount to your down payment will give you your maximum purchase price. This is the point I suggest starting to look, and make sure you keep within those limits.
After your offer is accepted by the seller, you have a period of time to do your ‘due diligence.’ This may include a pest inspection, sewer or septic tank inspection, and home inspection. When you use a licensed home inspector, they will provide a full and complete report on the home. Make sure to fully read and understand this report, because once it’s your home, it is up to you as the homeowner to correct it.
Extra Costs to Keep in Mind
Owning a home comes with quite a few extra costs that you did not have to worry about while renting. Property taxes are one of those extra costs. Many times, the taxes are factored into your monthly payments, but remember that the amount you pay in taxes could increase, raising your monthly payments. You will also need home owners insurance, a requirement of most lenders. This will depend much upon the location of your new home, what it is built out of, and other factors your insurance agent will know.
Repairs Are on You
A perk of renting is that when something breaks or leaks, it is generally not the renter’s responsibility to fix it. When you are a homeowner, you can’t call your landlord to the rescue. It is up to you to either fix an issue yourself, or hire a contractor who is experienced with your problem. Having an emergency fund designated only for your home is a great way to make sure you are prepared for anything that comes your way.
If you are thinking of taking the step from renting to purchasing your own home, give me a call. I would be more than happy to walk you through this life-changing, yet exciting and satisfying process.