The Smart Way to go From Renting to Home Ownership

Making the decision to purchase a home of your own instead of renting is one of the biggest and exciting changes you will make in your lifetime.  There are a few things you should do in order to make the transition as easy as possible, starting with financial preparation, as well as mental preparation.

It’s no surprise that the housing market has been affected by the downward turn of the economy, but that doesn’t mean that all hope of home ownership is lost.  In fact, this could be the perfect opportunity for buyers who want to take the step from renting to owning.  One of the factors that contribute to the housing market’s sluggishness is that lenders are reluctant to give loans to home buyers, which is why proper financial planning is a key component to home ownership.

Know Your Credit
Having good credit is an essential component of smart home buying, but so many people don’t know where they stand.  What’s a good score?  What can I do to improve it?  How do I even know what’s on my credit report?  These are all questions that you should be able to answer prior to dealing with a lender, as the more informed you are, the more you can do to improve your credit.

The better shape your credit is in, the better your potential to obtain a mortgage to buy a home of your own.  Tip – every year you are entitled to a free credit report, which you can get by visiting www.annualcreditreport.com.  Use this report (one from each of the three top credit reporting agencies) as a starting point to give you an idea of where you can make improvements.

Lower Your Debt
Before you apply for a mortgage, it is essential to have as little debt as possible.  The smaller your debt, the better your debt-to-income ratio will be, a number that lenders use to determine how much they will allow you to borrow.

Lenders look at debt such as school loans, car loans, credit card bills, personal bank loans, as well as child support and alimony, so anything you can do to lower the amounts owed, the better buying opportunity you will have.

Become an Informed Buyer
It is simply not enough in today’s economy to sit back and let your dreams of home ownership find you.  Having a top notch real estate agent to work on your behalf is the first step in becoming informed about all there is to know during the process.  The agent should be able to guide you every step of the way, alleviating the need for you, the buyer, to have to learn the ins and outs on your own.

Save for the Down Payment
The larger of a down payment you can make when buying a home the better, as this will reduce the amount a lender will have to give you, making you a more appealing candidate.  As a general rule, plan on having 20 percent of the purchase price to put down.

Each of these steps will help you, the buyer, be in the best possible position to make your dreams of home ownership come true.

If you have any questions about these smart ways to own instead of rent, or any other questions about real estate, buying, selling, or anything happening in the Lehigh Valley, please don’t hesitate to contact me, Elizabeth Tersigni, as I am always happy to help!