In part one of this two-part blog series, we went over some of the basics on making the all-important transition from renting into homeownership. Owning a home holds several major benefits over renting, both financial and otherwise, but many potential buyers struggle with understanding when they’re in the right financial shape to consider this leap.
At Altius Mortgage and our partners at Mortgage Ogden, we’re happy to offer a variety of mortgage loans for first-time homebuyers, from FHA and VA mortgage programs to certain low-down payment conventional loans available to those who qualify. While much of part one went over the benefits of homeownership and finding the ideal time to make the transition from renting, today’s part two will dig into some of the specific steps we recommend following once you’ve decided to go down this road.
Do Your Research
The first major area to lean into is research, both on your own financial situation and the broader market out there. This is a field that can be complex to those who have not dealt with it before, and given the amounts of money that are at play and the long-term impact of the decisions you’ll be making, it pays to know what you’re getting into.
For some, various homebuyer education courses – offered both online and in other settings – might be ideal, helping them grasp basic terms and pieces of the mortgage application and home search process. For others, leaning on trustworthy sources like friends or family who work in real estate or the mortgage industry may be beneficial, though you should be quite sure this is someone you trust – and not someone who is going to try and lock you into working with them, which shouldn’t be decided until later in the process.
Credit, Debt and Income
Another major area to focus on for the homebuying transition is your overall finances, which can generally be split into credit history, current debts and your income. Ensure your credit score is at a high enough figure and is also accurate, plus that you are not paying exorbitant amounts of debt that will raise your debt-to-income (DTI) ratio above where many lenders will feel comfortable lending money to you. In addition, look at your savings and expected future income to determine your capacity to make a robust down payment, plus to understand the general range of home prices you’ll be looking for.
Specific Budgeting Themes
Some of the specific areas you’ll need to be budgeting for as part of a homebuying process:
- Down payment
- Closing costs, earnest money or mortgage “points”
- Moving and relocation costs
- Utility deposits
- Insurance and property taxes
- Emergency expense savings
For more on making the transition from renting to owning a home, or to learn about any of our mortgage rates or other mortgage solutions, speak to the staff at Altius Mortgage today.