If you’re a renter and intend to one day own your own home, the being prepared is one of the best things you can do to ease the process. Buying any type of property isn’t easy, but you can avoid some of the pitfalls by having all your ducks in a row ahead of time. Here are 5 things that will advance you in the transition from renter to homeowner:
When renting, all you pay is your rent in most case, but as a homeowner a mortgage purposes satisfies several things. A mortgage payment is broken down by four things, P.I.T.I. (Principal, Interest, Taxes, Insurance). This is very vital to know because some towns have higher tax rates than others which will ultimately increase your monthly payment no matter how good of a deal your realtor gets for you. You also are responsible for the things that go wrong on your home, and the repairs that go along with them. This is a very overlooked aspect as many people arent ready for the things that tend to go wrong.
KNOW HOMEOWNER TAX BENEFITS
Mortgage interest and property taxes are both deductible when you file your annual tax returns and reduce taxable income. These deductions significantly lower the cost of home ownership. This is one of the best benefits to owning property.
KNOW THE RENT VS. BUY NUMBERS
In most areas of the country it is becoming cheaper to buy a home rather than rent a place. Most people are scared of the down payment required for a house but fail to realize, the average rental in Connecticut will ask for first, last, and one month security deposit when renting. This number can come close or sometimes match a normal 3.5% down payment on a home loan.
KNOW WHAT MORTGAGE PRODUCT WORKS BEST FOR YOU
There are a few different routes you can go for financing when buying your first home. Most clients go the FHA route which is 3.5% of the purchase price as a down payment. These loans have lots of flexibility and aren’t too hard to get approved for. CHFA loans are 100% financing and lots of people want to go that route because no down payment is required on the loan, but they have a few loopholes as to what you can and can’t do with the property. Speaking with a Realtor or loan officer can help figure out which product would be best for you.
START GETTING YOUR CREDIT SCORE RIGHT
Credit is a very vital part of getting approved for a home loan. Most banks will require you to be upwards of a 650 Fico score, no current collections, and a 12 month window of no late payments. If you need help with this, visit this link below for my free Ebook that will hep you get your credit ready.