Making the jump from renter to homeowner is a big decision. From finances to credit, a down payment and rates, moving costs and home maintenance, there are several factors to consider. To help you decide, we’ve come up with some questions to ask yourself before determining if you should continue to rent or if you’re ready to jump into homeownership.
Renting is a good way to have time to build your credit history, get settled into your new independent life and save money for a down payment. Most homeowners rent before buying but several things should be considered before buying a home. Accumulating a down payment, your list of have-to-haves (like school districts or daily commute) and your local housing market are good places to start.
The main difference between renting and owning a home is equity. You build equity in your home as you make mortgage payments and as the value of your home increases. Every mortgage payment you make includes interest and principal repayment. Over time, the principal repayment reduces the remaining amount you owe. In the first few years, most of your payments will be interest. It is in later years that your equity build-up really takes hold. While equity is a great selling point, owning a home is a commitment you should be sure about before going forward.
Questions to ask yourself
- Do I want to be in charge of maintenance of a house?
- Caring for a house is a big, unending job. From yardwork to appliances, maintaining a property is important for any homeowner. As a renter, it just takes a call to a landlord but as a homeowner, you are responsible for those repairs.
- Am I ready to make my home the perfect space for me?
- One of the perks of owning your own home is having the chance to make your mark on it. From paint colors and renovations, and furnishings to decorations, your house is a blank slate.
- How much space do I want?
- Paying top dollar for a spacious apartment is always an option, but with a house you will be able to find the size of house you want within your budget. Outdoor space will also be a factor. Have you always wanted a fire pit or a deck with a grill? This is your chance to customize your space.
- I’m paying rent anyway… how can I make my money work for me?
- Whether you’re paying a mortgage or your rent, that part of your budget probably won’t change. With a mortgage, you build equity with your monthly payments and as the value in your home increases. You can use this equity to make home improvements, make big purchases and more.
- Am I planning to move in the near future?
- The flexibility of renting is a good choice if you don’t plan to stay in your current city for long. Once you are ready to settle down, buying a home is a great way to give yourself roots.
These questions are great if you’re thinking about making the jump from renter to homeowner. Taking on the responsibility of house comes with a lot of perks like flexibility to create your own design, more space and the opportunity to build equity. Renting allows you time to build a credit history, an important part of the loan process, save for a down payment and gives you time to make sure you’re ready for your own house.
When you’re ready to buy a house, our experienced lenders are here to help you. Connect with a local mortgage officer here.