Wondering how it's even possible to buy a house while renting an apartment?
These expert tips will point you in the right direction and send you on your way to happy homeownership.
Transitioning from renting to owning is a significant milestone in life. Unfortunately, buying a house isn't easy. As rent prices and mortgage rates increase, it's challenging to save substantial money. So, what's the process of buying a house while renting an apartment?
For many people, focus and financial discipline can make a big difference. Getting a roommate, downsizing and asking for help from family are all options, but there are others, as well. We reached out to real estate professionals from San Francisco, CA, to Austin, TX, for their expert advice to help you go from renting to owning.
Inform yourself before budgeting for a home
Before you even consider how to budget for a home, make sure you cover the basics. Jennifer Black from Usaj Realty offers these tips.
● Step 1: Meet with a lender to ensure you're financially ready to own a home. Your advisor should help you get to where you need to be. With a higher credit score, you'll be able to secure a better mortgage rate.
● Step 2: Understand the importance of saving for a down payment and how it will impact your mortgage payment. Larger down payments lower your monthly costs and potentially remove the mortgage insurance requirement.
● Step 3: Plan ahead. Many out-of-pocket expenses come with being a homeowner. When you rent, the landlord is responsible for maintenance, taxes and improvements. When you own, you're on the hook for all of these and more.
Save money by negotiating rent with your landlord
"If you're only renting for a short period of time, don't expect a perfect home or apartment and don't invest a lot of money," says Suzi Farajiani, a Los Angeles real estate agent. "You can save a lot by signing a longer lease and possibly even negotiate with the landlord for a better deal. If you don't have pets and are in good standing with your credit and finances, a landlord may view you as an ideal tenant and strike you a deal."
Slowly budget your way out of the cyclical cycle of renting
"The most important tip for renters is not to get caught in a continuous cycle of renting," says Dwight White from Dwight REALTOR 4U, a Pennsylvania real estate broker. "Spending too much on rent is a common reason people can never afford to buy. To help your finances, make sure your monthly payment is well below what you can afford. Finally, prepare to budget for the unknown and keep a rainy-day fund."
Take stock of your budget
"While renting, consider your lifestyle and spending habits and honestly assess your budget," says Rhonda Kohn, a West Los Angeles real estate agent. "Lenders often approve buyers for a larger loan than is comfortable, so you need to be clear about what you spend every month and what portion of your income you're comfortable spending on housing."
Look for houses in linear markets
"The U.S. has three types of housing markets: cyclical, hybrid and linear," says Jason Hartman, a prestigious nationwide real estate group. "When looking for a house to buy, consider buying in linear markets where property values are consistent and more reasonably priced. Cyclical housing markets tend to have crazy spikes in appreciation or sudden plummeting property values. You are more likely to overpay in these markets and get less bang for your buck."
You can do it
Whether you believe it or not, buying a house while renting is possible. It just takes a little planning, a lot of work, and patience. Put in the effort now and reap the benefits down the road.
Article Submission by: Rent.com