As the saying goes, “Knowledge is power.” This statement is nowhere more true than moving from renting to owning a home. You may have been pondering buying a home for years, or maybe the thought has just occurred to you. Either way, it is essential you know what you’re getting into and that you walk into the situation fully prepared. Making the leap from renter to homeowner is glorious, but it can feel overwhelming if you’re unprepared for what’s coming. It is far better to start planning now and take all the necessary steps, especially if you’re a first-time home buyer.
Pros of renting
First, let’s acknowledge the benefits of being a renter — many of which you will lose when you buy your own home. When you rent and something breaks in your home, such as an appliance or the HVAC system, you typically don’t have to worry about the cost of repairs or how you’ll tackle them. You can usually call your development’s maintenance team or landlord and schedule a time for repairs to be conducted.
In addition, in many cases, a portion or all of your utility costs are included in your rent payment. Another benefit of renting is that you can usually move out at any time. Even if you have signed a lease, you can typically break the contract, if needed, and turn in your notice. While this may not be an option for everyone, it does provide flexibility.
Cons of renting
The biggest downside of renting is that the money you spend is making someone else richer. A home is an investment, offering opportunities for long-term wealth and financial stability, and when you’re paying rent every month that goes to someone else’s investment, it can be a bit disheartening.
It’s important to remember that any love and care you put into your home will eventually become someone else’s benefit when you move out. You may also be limited by regulations on what you can and cannot do in your home, such as hanging large shelves, painting the walls, altering the landscaping, and switching out hardware.
Pros of owning
The biggest advantage to owning a home is that every dollar you pay toward your mortgage is an investment in your future. As the years go by, your home will grow in value, providing you with equity and a financial cushion should you decide to sell in the future.
When owning a home, you’ll have the ultimate freedom to do whatever you’d like to your space. Paint your walls, hang shelves, knock down walls, remodel the kitchen or bathroom, change up the flooring, or add a patio — the possibilities are endless as a first-time home buyer.
Cons of owning
The number one complaint about being a homeowner is that any repairs are your responsibility. If you need a new water heater or roof, you’ll need to pay for it yourself. Another downside to owning a home is that you can’t pick up and move whenever the mood strikes. You will either have to rent out your home or sell — both of which are serious undertakings that are more complicated than simply giving notice to a landlord.
Prepare for homeownership
If you’re thinking about owning a home, you’ll first want to ensure that you have the financial means to do so.
Improve your credit score
The first thing you want to do on your journey to buying a home is improve your credit. The better your credit score, the lower your interest rate will be. With interest rates increasing by the month, you want your rate to be as low as possible, as this will greatly affect your mortgage payment.
If you have any derogatory marks on your credit, consider having those removed by paying the outstanding balance or speaking with a professional. To maintain a good credit score, be sure to make your payments on time and maintain a low utilization rate on credit cards.
Increase your income
The higher your income, the more house you can afford. Consider speaking with your supervisor about a raise or picking up a side hustle for extra funds.
Save money
Paying off debt to improve your credit score and increase your income will help you save money, and you’ll want to have as much money as possible for a downpayment and closing costs when buying your first home.
Establish a budget and find your community
Once you’ve saved up enough money for a decent down payment, start looking at where you want to live. That knowledge will help you determine a budget and how much you’d like to owe in monthly mortgage payments.
It’s essential to remember that government-backed loans, grants, and programs available for first-time buyers, such as FHA and USDA loans, can help with down payment and closing costs.
When to make your move
You’ll know you’re ready to move from renting to homeownership when you have the following: a current job for two years, you’re ready to settle and put down roots, and you can afford the mortgage payment for the type of house you want. These three things are sure signs you are likely to be approved for a mortgage loan and that you’re mentally ready for the transition.
Prepare to enter the real estate market
Get pre-approved
Before looking at Columbia Gorge real estate for sale, you’ll first need to contact a trusted lender and get pre-approved. The bank will ask for proof of your income, bank statements, social security number, and other important information to determine how much you can afford in mortgage payments. Once you’re pre-approved, you’ll have negotiating power when putting an offer on a home.
Work with a trusted realtor
To successfully navigate the world of real estate as a first-time home buyer, you’ll want to work with a skilled and knowledgeable realtor who specializes in the area you want to live. Julie Gilbert has been working in Columbia Gorge real estate for 17 years, and as a lifelong resident of the area, she has the expertise necessary to help you find your dream property. Contact Julie today to begin your home search.
