What to Keep in Mind When Going from Renter to Homeowner
It's not uncommon for renters to one day go from a renter to a homeowner. While it may seem very similar, especially if you've been renting a home, there are some things to keep in mind.
Renting is certainly not the same as own. The mortgage doesn't translate directly to your rent in a perfect ratio. Instead, you have to think about other expenses, as well. Here's a look at some of the things to keep in mind as you go from a renter to an owner.
More Upfront Costs
When you rent, you pay a security deposit or maybe you pay first and last month's rent up front. As you become a homeowner, you will find out there are other fees you have to deal with. It starts with a down payment, usually 10% or 20% of the selling price, but it can be as low as 3%. Then, it moves on to the closing costs, which will another 1% to 3% of the selling price. Sometimes, the seller will cover closing, but you still have to think about the title insurance, home inspection, appraisal, insurance escrow and much more.
The Mortgage Payment isn't your Only Monthly Bill
Sure, you may have paid utilities at a home you rented, but you didn't have to pay for the homeowners insurance and the property taxes. These can be rolled into your mortgage payment, but they can also be separate bills. Either way, you need to account for these expenses when going from a renter to a homeowner.
No More Free Maintenance
When something breaks, you don't get to call a landlord and let them deal with it. It's now your issue. You have to fix it or have it fixed. This is where building an emergency fund becomes important before you become a homeowner.
You can't Leave Your Neighbors
When you rent, you may be able to leave the neighborhood for a new one after a year or less. Owning your home means your neighbors are going to be there with you for as long as you and they live in the neighborhood. Keep this in mind before you choose the neighborhood for you.
There are many things to keep in mind when going from a renter to a homeowner. While it may seem scary, there are plenty of benefits to owning your own home and for most people; those outweigh the things you will have to adjust to when you go from renting to owning.