buyers Buyers & Sellers home buying homeowners renting

5 Myths About Homeownership After Renting

No matter your background, no matter the economy–buying a home is a big deal for anyone. For first-time homebuyers, or homebuyers who have been renting for a while, the idea of buying a home might seem daunting. It’s true that buying a home is a major commitment and one that may seem out of reach for some people, but having the right information and perspective can help ease any confusion or frustration.

By debunking some myths around homeownership, renters and potential homebuyers can move forward with confidence and find the right home. Here are some myths about homeownership after renting to be aware of.

All Home Improvements Add Value to a House

If you’re looking at adding brand new appliances or wanting to tear up the flooring to add all-new hardwood with the hopes of making a profit when you sell it, you might want to think again. Not every dollar you pour into your home impacts its overall value. If you have a leaky roof, for example, replacing it only brings it back to the minimum expected standard that most buyers consider. Or if you build out a home gym, potential homebuyers looking at your home in the future might look at it as an unnecessary selling point. Before you take out a wall or add that pool to your backyard, think about how this might appeal to buyers down the road.

Only Excellent Credit Buys Houses

The short answer is no, you don’t need top-tier credit in order to buy a home. However, the better credit score you have on a scale of 300–850 lets lenders know that you are more likely to be responsible for your payments. Not only does your credit score determine how much a lender is willing to give you, but also if they’ll even lend to you at all. For traditional mortgages, a credit score coming in between 620–640 should suffice for VA and USDA loans, but it never hurts to find ways to improve your credit to better position yourself with lenders.

Only Budget for Your Down Payment & Monthly Payments

Sure, that’s a start. But in reality, you need to be budgeting for much more in the homebuying process. In addition to your down payment, monthly payments, taxes and insurance (yes, you need homeowners insurance), you’ll need to factor in closing costs and other fees that come with homeownership. From HOA fees to utilities, repairs to WiFi, you need to add a certain level of padding on top of your monthly mortgage payments to get a realistic picture of your finances. Moving across the country? Tack on a few thousand more dollars. Buying new furniture? That’s going to cost more, of course.

Just Keep Renting. It Sounds Cheaper.

When it comes to short-term solutions, renting can indeed be cheaper. Rent payment is usually cheaper than a mortgage and as long as you didn’t start a fire or trash the place, maintenance and repairs are covered by your landlord. However, if you do plan on staying somewhere long-term. It may be wise to consider purchasing a home if you’re able to. Homeownership offers you stable payments with fixed-rate mortgages whereas rent payments can rise annually.

Buy the Maximum Amount of Home You Can Get

Your lender will determine early on in the process how much you qualify for in terms of overall price based on your income, credit score and current assets. However, don’t twist this with your personal budget. It might be tempting to want as much house as you can get, but some lenders will allow you to put half of your income toward your mortgage payments. However, try to keep from doing this, especially if you have other financial commitments, like car payments or student loans, or financial goals, such as saving for a family.

While there may be many more myths to debunk around homebuying, these should give you a good idea of what transitioning from renting to buying will look like. For more help debunking homebuying myths, browse the HomeSmart blog for more helpful tips on everything from mortgages to moving.

Related Posts

buyers real estate agent showing open house

[Property Checklist]: How to Take House Hunting Notes

Searching for your new home can be an exciting and fun process, but at the same time, it can be a li...

February 10, 2021
  0
buyers home buying

Why You Need a Home Inspection

Getting a home inspection is a very important part of the home-buying process. This is the time for ...

January 21, 2021
  0