Wherever you read about the benefits of buying a home, it’s almost only ever described as a being ‘better’ than renting. However, while this is true in most cases, it does not mean it’s the perfect solution for everyone. There is a lot to think about, from finances through to hiring attorneys, and the truth is that sometimes buying a home can lead to disaster. Here are the key concepts you need to consider if you want to make the transition from renter to a homeowner as smooth as possible.
Comparing the money
First of all, it’s worth thinking carefully about how much you pay for rent and how much you will pay for your mortgage. In most cases, due to the rising costs of rent, a mortgage will be cheaper. But it isn’t necessarily the case. A mortgage loan officer can help, of course, as can a financial adviser. But just because you can afford to pay a monthly rental fee, doesn’t mean you will be eligible for a similar mortgage rate. Ultimately, the decision will be made by your mortgage advisor on your income and your credit rating.
Check your credit
Before you start looking into buying a home, check your credit rating. It is one of the primary things that mortgage providers will use to determine your mortgage eligibility. Some lenders are more flexible than others, although you may find you end up paying more in interest. Again, check your figures and make sure you can afford the payments.
Understand your responsibilities
One of the biggest shocks to the system of becoming a homeowner is that everything is down to you. If anything goes wrong with your heating system, you have to pay – there is no relying on a landlord. It catches many new homeowners out, so preempt any situation and ensure that you are building up an emergency fund.
Insure everything
Another way of reducing the costs of emergencies is to use insurance. Understanding homeowners insurance is the first step. You should also insure your critical household functions – it will lessen the impact of any nasty surprises. It will also allow you to plan a lot better, and work out your fixed monthly costs. Of course, these extra expenses will soon add up, so you need to consider them to your total outgoings when comparing rental rates.
Furnishing your home
Another cost to think about is furnishing your home. Again, it’s important to include this in your home buying budget – especially if you currently live in a furnished property. Beds, storage, cupboards can all cost a small fortune. Plus, of course, you may need some money for doing renovations. It’s rare to buy a home that is just perfect for your needs. Often, you might want to refresh a tired looking bathroom or kitchen. Unless you are happy to make do for a while, it’s something you will need to save up a significant amount of money.
As you can see, there are plenty of things to think about when making the transition from renter to homeowner. In most cases, it will be worth it – but make those financial checks beforehand to ensure you can afford it.
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