From Renter To Owner: 8 Important Reminders Before Making The Transition

If you’re renting now, you most probably dream of having your own house one day. In fact, you’re probably already looking into buying a property to your name right now. So aside from finding that perfect dream home, what else do you have to prepare for in buying your own place of residence? Here are 8 important reminders before making that renter-owner transition:

1. Make a Realistic Renter-to-Owner Timeline

After the tedious task of searching and even after your seller accepts your offer, you may think that the job is done. You’re move-in ready! Not just yet. Be reminded that it may take around 30-50 days to close a home. You have to make sure that you time it right with the end of your lease. You don’t want it to be a renter-homeless-owner story!

2. Know the costs associated with homeownership

Costs, costs, costs! There’s a lot more to pay for upfront than just a security deposit as a renter—from deposits, home loan origination, title insurance, land surveys, home inspection, insurance escrow, appraisal, among others. Then, of course, you have to consider mortgages, home association dues, etc. in the long run.

3. Study Rent-vs. Buy Math

More costs mean more math. This will be more than just rental payment vs. P.I.T.I. A more accurate comparison will also include after-tax-benefit homeownership costs and rent costs.

4. Know Your Tax Benefits

With all these costs, don’t worry, your tax deductions will significantly lower the costs of homeownership. Mortgage interest and property taxes will be deductible in filing annual tax returns, and reduce your taxable income.

5. Start preparing your credit score now

In getting the best mortgages, credit scores are very important. Those who lend want reliable and on-time payers, after all. If you only have one credit card, start getting more now, while you have time to grow your credit score. More credit accounts are seen as better.

6. Research mortgage options

You can’t only shop for the best-fitting home for you, but also the best-fitting lender too. Compare rates of your mortgage based on your loan type, location, purchase price, down payment, and as mentioned earlier, credit history.

7. Prepare for more responsibilities

These include maintenance issues from the roof of your home down to its very foundation. Set up insurance and even an emergency fund for these responsibilities.

8. Think long term

Consider the fixed features of the home such as location, think of the things you may want to alter in the long run, even take note that the neighbors you will have in this new home may be your neighbors for life, and if need be, think about the property’s resale value.

The 5 Biggest Red Flags To Spot When Purchasing A New House

Whether it’s your first time buying a home or have had experience in purchasing properties, it’s very important to be reminded of what can be a problem after the sale has been made. After all, we want to minimize costs and get the best deals. How can this be done? Home inspections are crucial in the process of house hunting. Sure, the house is charming and homey, but there might be some cracks and rotting that are signs of major damage. Here are five of the biggest red flags to spot:

1. Any Foundation or Structural Issues

Cracking is one of the biggest signs to watch out for in terms of foundation problems. Cement settling, for example, may be indicated by small cracks in the basement. Larger cracks on the other hand, may be a symptom of structural integrity issues of the home. You may also take note of unfit doors. If you have a hard time closing and open doors in the house, this may mean a larger structural issue. Specifically, check if the door fits squarely in its doorframe.

2. Pest/Insect Problems

Aside from sending shivers down your spine, having pests in your home may also mean wood destruction. The most common pests you should look out for are termites, powder post beetles, and carpenter ants which may damage your home.

3. Random Freshly Painted Walls

Freshly painted rooms are normal because this makes the property feel clean and fresh. But if only one wall or area of a room looks freshly painted, this may be a sign of the seller trying to cover up a problem. This is automatically a cause of concern, and you should ask about it right away.

4. Amateur Workmanship or Repairs

The older the home, or the longer a family has stayed in it, the more repair work the previous homeowner or another amateur may have done. You will most commonly see this in areas of plumbing, carpentry, and electrical work. It is best to watch out for leaky faucets, toilets, missing trim work, and other potential do-it-yourself/handyman projects in doing home inspections.

5. Neighborhood

Remember, in purchasing a home, you are not only going to live in the specific lot, you will also be living in the neighborhood. If a house seems perfect, and do not have the above red flags, make sure that it also has a neighborhood with an overall good condition. How do you know this? Take note if there are a lot of vacant lots in the area, and if the other houses are boarded up. If you can, also check the crime rate in that particular area—is it increasing or decreasing? This may not only affect your stay in the home, but also the property’s resale value in the future.