Preparing For Home Ownership While Renting

Let's talk about preparing for homeownership while renting. You may not be ready to move just yet, but that doesn't mean you can't prepare now. Here are three things you can do right now while renting to put yourself in a better position when you're ready to buy.

Test Your Budget

First thing you can do is test the budget. We all know that home ownership comes with certain costs that come with home ownership. You can estimate how owning a home will affect your budget. It's important to know what your budget is. A realtor can help you determine how much you can afford, the potential mortgage payment you'd be making, your local property taxes and maintenance repair costs, and other things you might incur as a homeowner.

You have HOA fees, maybe you'll live in a special area where you have to have windstorm and hail insurance and other things like that. There could be quite a bit. Don't forget about lawn maintenance if you're renting, you may not have a yard to worry about. You might live in a condo or an apartment and you don't have to worry about those things. With a home, you may end up with a yard and so there's the extra expense you're not used to. Keep those things in mind when you're budgeting for your nest home.

Check Your Credit

The next thing you can do is check your credit. Do you plan to get a loan instead of paying cash? Before you apply for a loan, request a free credit report to find out what the lender would see. If your report has errors, you can correct them before they affect your ability to get a loan, or maybe it affects your score enough to where it messes up what interest rate you could have had.

These days you need all the help you can get. Let's get the best credit score and make sure there's no errors. Trust me, mistakes happen, and we're not perfect as human beings. The people that are reporting or keeping your credit scores, might make a mistake. The smallest error can have the biggest impact on your credit score, which could have the biggest impact on your ability to get that loan or that interest rate that you really wanted. You might even be able to take steps, if you do it early enough, to improve your credit score before purchasing a property and getting that loan. Check out your credit history, your credit report, if you're getting a loan.

Make a Wish List

The other thing you can do is create a wishlist. Do you know what you want? Everybody has a wish list. The wish list is usually pretty long, but let's see what you got. There may not be a home that offers every single amenity that you have on your list. You should have a general idea of what you're looking for. Do you have your mind set on a certain area, a certain neighborhood, or a certain kind of home, a certain style, traditional, craftsman, or colonial?

What are you looking for? Maybe a home with less than two bathrooms is a deal breaker. You may see potential in a home with a smaller kitchen or a not-so-appealing paint color. Let's face it, things like paint color can be changed, but a longer commute without that water view, maybe you can't justify that. Maybe a water view is something you must have. You have to have that water view and you don't mind commuting. Everybody's different. You can really narrow down your initial search criteria by identifying what you want as well as what you absolutely do not want, AKA, the deal breakers.

This will certainly give you a good starting point when you're ready. Look, it's never too early to talk to a real estate agent when you know that you have plans to buy. At some point, you're going to have to talk to a realtor. You may as well do it as early as possible to see what you're up against. See what you can do to improve your odds of getting a home, a home in a certain area.

You could talk about the real estate market, but that's very broad. Your real estate market is your neighborhood, your city, your community. It's a little bit smaller and it may not be the same as on the other side of the state or in another state. You have to look locally at where you're going to move and say, "This is what I need. This is the information I need. What's available? How can I narrow down my search by knowing what I want? Is it even available there?" If it's not available there, what are you going to do?

You have to make those decisions a little bit early. Start learning about the process to help you avoid surprises along the way, such as that home you want is not even available in that area. Remember, preparation and information will help you get to where you want to be.

Get a free credit report here: https://www.annualcreditreport.com/index.action

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