Are you in the process of buying your first home? When you first get out on your own in the world, renting tends to make the most sense financially. But now, whether you’re moving in with a partner, getting a new job, getting tired of rental commitments or you’ve finally saved enough for a down payment on a home of your own, you’re ready to take the leap and invest in a home of your own. While buying your own house is both empowering and exciting, transitioning from renting to home ownership comes with its own set of changes and challenges.
Wondering what to expect from a renting to buying transition? From preparations and expenses to additional responsibilities, here’s everything to add to your first home-buying expectations.
You Need Your Credit in Check
When you rent a home, you can get approved and get by on a decent credit score — after all, you’re only on the hook for a temporary lease and monthly payment, which you or the owner can terminate at almost any time. When you’re buying your first home, however, the commitment is more serious — and your credit becomes a lot more important.
It’s unlikely you’ve stockpiled savings large enough to buy a house outright, which means you’ll need a bank to provide you with a mortgage to help you finance your new home. The higher your credit score, the higher the likelihood you’ll be approved for a mortgage. When your credit score is high enough, you’ll also earn a lower mortgage interest rate — saving you as much as thousands of dollars over time.
You’ll Have to Budget Before Buying
When you’re ready to close the deal on a house you’ve fallen in love with, you might want to jump right into the sale and work out the mortgage around the details of that specific house. Before committing to a house that’s too expensive, however, it’s important for you to understand the ins and outs of both your personal budget, your financial circumstances and your mortgage rules.
Make sure you have your finances together and meet with the bank to apply for a mortgage loan and determine what price range you can afford before house hunting. When you know your budget, ask your real estate agent to show you properties within that range.
You’ll Take on Extra Expenses
Renting an apartment or a house does come with expenses, and you’re probably used to paying for some utilities or renters’ insurance in addition to your monthly rent. When you move from renting to homeownership, however, there’s no one to call when a pipe bursts or the stovetop burner stops working — and there’s certainly no one to cover any included utilities except you.
When you’re planning to buy your new home, make sure you consider and plan for the additional expenses you’ll be taking on, including:
- Property taxes
- Homeowners’ insurance
- Maintenance and repairs
- Add-ons and home improvement projects
- Air-conditioning units and furnaces
- Internet, cable, utilities and other bills
Also, make sure you’re prepared to make an appropriate down payment for the house at the time of sale.
Your Lifestyle Will Shift
One of the most important changes you can expect when buying your first home is in your lifestyle. You will have more responsibilities and more expenses, but you’ll also have more stability, more time to settle in and stop worrying about your landlord’s whims, more authority in your own living situation and more freedom to make choices about your home’s appearance, design and landscaping. It’s your time to make a home of your home and plant roots in your community — so enjoy every moment.