For those who are weary of being a tenant, the lure of home ownership is strong. But unlike signing a lease contract which only lasts for a few months, signing a deed of trust for a home purchase means accepting the responsibility of tens or hundreds of thousands of dollars of mortgage debt and the maintenance and upkeep of a house. If you are tired of being a tenant and are yearning to finally become a homeowner instead, the following action plan can provide you with positive steps to help you succeed.
Make sure that the timing is good
No matter how tired you may be of life as a tenant, it is wise to make sure that your timing is right for becoming a homeowner before doing so. In general, homes need to appreciate for at least two years or longer after purchase before being sold in order to avoid capital gains and to leave the seller in a positive financial position at closing. So the first step in becoming a happy homeowner is to make sure that you can reasonably expect to remain in the area for the next few years or longer.
Make good financial preparations
Making a hasty decision to buy a home can lead to buyer's remorse, as well as other regrets. To avoid this, tenants who want to enjoy the most successful purchase process and ensure a happier ownership experience should give themselves time to make good financial preparations before beginning to look at homes for sale. These financial preparations include:
- paying off as much debt as possible
- saving up funds to cover the amount of the down payment, closing costs, and other expenses related to your upcoming move, such as utility deposits and moving fees
- getting an approval for a home loan with attractive terms that fit your budget and needs (remember to make sure that your approval amount is based on your net income, not your gross amount)
Accomplishing these tasks, especially if there is significant debt to pay off, can take a few months, so tenants will want to allow plenty of time to accomplish these goals before moving on to the next step in the process.
Make sure you hire the right agent
Once you have determined that you will likely remain in the same area for at least two years and you have completed your financial arrangements, the next step to accomplish is hiring the right agent. Since you will want to be sure you are working with an agent with whom you will enjoy good rapport, take time to shop for the right one before beginning to actually view homes. Qualities usually found in the best agents include:
- a willingness to maintain good communication with their clients and other agents
- a record of success in their market area
- an excellent knowledge of the local market and the trends that affect it
- a willingness to go the extra mile to help first-time buyers learn about the process so they will be more apt to become successful homeowners
When considering each agent, prospective buyers should request to speak with a few previous or current clients who can offer important insight into the working relationship that will be possible with each agent.
Make sure to allow sufficient time to close
Making the leap from tenant to homeowner involves carefully coordinating the end of the lease with the closing and possession date for the home being purchased. If possible, prospective buyers should plan their closing date to be at least thirty days before they must move from their rented home. It can also be a good idea to see if your landlord will allow you extend your lease on a month-to-month basis, in case any issues arise that cause a delay in closing on the home you are purchasing.