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Part of helping you make a smooth transition from being a renter to becoming a homeowner is understanding how the financial responsibilities differ. Regardless of how far into the future you plan to stop renting, knowing what to prepare for will be helpful. When we work together, you can trust that you have an experienced realtor who will be with you each step along the process. Let’s do this!
There are known additional costs to owning a home such as property taxes, homeowner’s insurance, and the cost of repairs and on-going maintenance which aren’t applicable when you’re a renter. But, when you plan for these and have a budget, you will be able see if homeownership is possible with your income and savings.
The money invested into homeownership builds property assets through equity building, tax benefits and appreciation. Renters don’t reap these same returns. Historically, property values tend to appreciate in value over time which increases your net worth.
While the mortgage rates have seen some recent declines, the home prices and affordability gap may mean renting is right for a bit longer. To assist in answering the question, “Should I rent or buy?” the HAR.com website offers a handy mortgage rate calculator tool. This online calculator compares the cost of renting versus the real cost of buying a home.
Interested in the current market report? Click the Market Reports tab on my website and scroll to the most recent date for the latest numbers.
According to leading lender, Fannie Mae, buyers should aim to spend no more than 28 percent of their annual income on housing. Expensing more than 30 percent can risk becoming house poor. Remember, a having a budget brings peace of mind when you’re looking at homes. Your agent with work with you to show you listings in your budget range.
If you need a hand figuring out what you can afford, let’s talk. I’m happy to help you work through the numbers and come up with a range that is comfortable for you to maintain.
Get a mortgage pre-approval. Unless you will be making the purchase with all cash, it will be necessary to secure a mortgage from a lender. Getting approved for financing before beginning your home searches helps you know how much home you can afford. Once you know how much financing you are able to secure your REALTOR® will show you homes in this range. Pre-approval also let’s sellers know you’re a serious buyer who is ready to make a deal and find a home.
Aim for a score of 620 or higher credit score to get better lending terms. Lending requirements continue to change so plan a conversation with your loan officer for the most up-to-date information and today’s lending requirements.
Typically, 3-5% of the house price is required by several first-time home buyer programs such as the FHA loan program. VA loans and USDA loans can be made with zero down payment. If you’re able to increase the down payment to 10-11% you will be able to avoid private mortgage insurance (PMI) as required by your lender plus save money, long-term.
Interested in more of my blog posts on the topic of becoming a homebuyer? Check out these blog posts:
Since 2004 Sara Lyn Nguyen continues to bring a wealth of knowledge and expertise about buying and selling real estate around the Houston area to those she serves. Sara is a multi-year award winning REALTOR® and relocation specialist where her clients trust her to have up-to-date information on the real estate market. She has been one of Gary Greene’s Multi-Million Dollar Top Producers, and citywide was the #2 Top Producing agent in 2020, #3 in 2021, and #2 in 2022. When it’s time to buy, sell, invest, or relocate speak with a trusted professional knowledgeable in the homes and neighborhoods of Fort Bend/Sugar Land and the surrounding region.
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