If you’ve been renting a home for years now and are tired of moving from place to place within the same city — along with giving 30% of your income to your landlord — then this blog is for you.
While renting an apartment for the majority of your life is most certainly an option, many people today — especially of the millennial generation — dream of a yard with a white picket fence, but don’t think it’s in the cards for them due to their financial situations or the fact they know next to nothing about what the home buying process entails.
You might be delightfully surprised to know that switching from renting to owning a home isn’t as daunting of a venture as it may seem. This is because the home buying process has been made simpler by national title companies like Elevated Title™ that walk you through the entire real estate closing process and offer all of their title services at a flat rate through a simple mobile app, Close Happy®.
For those that are uncertain about if they are ready or not to take the plunge into homeownership just yet, we’ve outlined a few recommendations for items to have checked off before deciding to purchase your very first home.
Telltale Signs You’re Ready To Purchase A Home
You’re Out Of Debt
This isn’t by any means a must in order to purchase your first home, but it can certainly make the decision easier if you are still making hefty monthly student loan payments that make a mortgage seem far out of reach. At the same time, if you are close to being out of debt and have collected a track record of on-time payments, this can make it easier for you to get a great deal on mortgage rates. Which brings us to our next point.
You Have A Steady Job
While every job comes with its share of uncertainty for the future — no matter what company or industry — the longer that you have stayed put at a job, or the more years of business ownership that you have under your belt, will go a long way in backing up your eligibility for home ownership. It’s also good to ensure you have a potential promotion on the horizon that will make your mortgage payments more manageable.
You Have Good Credit
In most cases, it is certainly better to put monthly payments towards a mortgage that leads to ownership rather than rent payments that leave you empty-handed, but only if you have established a good line of credit beforehand. Having good credit is essential before going into buying a home because if your credit is poor, your bank account will suffer from higher mortgage rates, making renting seem much more appealing than previously.
You Can Fix A Leak
When you become a homeowner, you without a doubt have more responsibilities on your plate, and one that goes unacknowledged by many is the fact that you have to be able to fix your own problems. As a homeowner, no longer are the days of calling up your landlord or property manager anytime there’s a leak in the faucet or a light bulb that’s burned out. When you are the owner, you have to either have the skills to be able to fix problems yourself that arise or the resources to pay others to fix them for you.
You Love Where You Live
If you’ve set up shop where you live and have no plans of leaving within at least the next five years, then there’s no reason to keep renewing that lease. The reason we do say to be certain of your permanence for the next five years is that this is how much time it will take for your home investment to be worthwhile as you can either sell your home, hopefully for more than you purchased depending on the area, or use our title services to perform a title transfer.
At the same time, don’t feel pressured to purchase a home just because you don’t plan on leaving the area anytime soon. Life certainly can throw curveballs your way, and if you aren’t already married with three kids, don’t feel like you have to purchase a home simply to “plan ahead.”
You’ve Saved Up For A Down Payment
While you may delight in the discovery that you can switch from rent to mortgage payments without taking on too substantial of a financial burden, the down payment requires a substantial investment — the largest investment you’ve ever made.
While it is easier today than in the past to purchase a home with down payments as little as 3.5 percent (on a $200,000 home, that’s just $7,000) many people save up just that amount and think they’re sitting peachy. The fact of the matter is, there are a lot of additional expenses outside of a down payment that go into purchasing a home from closing costs, insurance, taxes, and repairs and furnishings necessary to transform your property into a livable home.
Our advice is to save up roughly double the amount of your estimated down payment prior to tackling home buying, and also to use Close Happy® title services to make your closing costs a minimal factor in the equation.
You Have An Emergency Fund Saved Up
An emergency fund is imperative to have before going into purchasing and then taking care of a home. Every home inevitably has problems that arise, and you need to be financially prepared to jump into action when yours requires it. This is a factor that holds many millennials back from purchasing a home as building up a savings account has been far down on their list of priorities over the years.
If all of these signs, or even just a handful of them, apply to you, then congratulations, you are well on your way to being ready to break up with your landlord and make the switch from leasing to owning a home. If you are already in the process of purchasing a new home, talk to your lender about using title services from Close Happy® by Elevated Title™ for a simple, efficient, and streamlined real estate closing process.