4 Quick Tips for Buying a House While Renting an Apartment

Home ownership has been a sought-after dream of many people. Unfortunately, with the ever-changing cost of homes, interest rates, and economic hardships, it isn’t always easy to achieve. If you’ve been renting an apartment for some time now and are ready to move into a home of your own, there are 4 things you need to do before you start your search.

Meet a Relator

Before you begin your search, it’s vital you meet with a relator to discuss your home-buying plans. Do some research on local relators, or ask family and friends if they recommend a relator they have used in the past or know of. A common misconception is that you will need to pay to use a relator. In reality, the seller is the one who ends up paying. More specifically, they’re in charge of paying the relator’s fees at closing.

Don’t be afraid to ask any questions you may have about the process of homebuying, especially if this is your first time. They’re there to help and search for homes that will work for you.

Calculate Your Budget and Save

Home listing sites will list estimate costs of a home, but you shouldn’t base how much you can afford off of that information. The first thing you need to do is make sure your debt-to-income (DTI) ratio isn’t high. Your DTI ratio compares how much you owe each month to how much you earn. To calculate this, add up all your monthly bills and divide the total by your gross (pre-tax) monthly income. The percentage you get is your DTI ratio. Ideally, your DTI ratio should be no higher than 36 percent, so it’s important you lower that number before you begin house hunting.

Second, check your credit score. Many banks offer free FICO score checks that you can use, or you can go to any major credit site and run a credit report. Your credit score is one of the most important factors used to determine if you’re able to take out a mortgage and buy a home, so it’s important you know what is affecting your score, and how you can improve it. Credit scores change frequently, but you need a score of at least 620 to qualify for a conventional mortgage.

Third, save up for a down payment and closing costs. You’ll need at least 3 percent of the home’s value as a down payment, and an additional 3 to 7 percent for the closing cost. The more money you have saved for a down payment, the lower your mortgage payments will be.

Review Your Timeline

Transitioning from an apartment to a house doesn’t happen overnight. Once you know you’re ready to begin the homebuying process, plan things out by the month. A safe cushion is about 3 months for meeting with a relator, budgeting, searching for homes and touring them, and putting in an offer and closing. You may need more time, though, and that’s OK. It can be a competitive market, and homes often get sold quickly.

Make sure you also know how much longer you have on your apartment lease, and whether or not you need to renew on a month-by-month basis (or are even able to do so). Breaking your lease is difficult, so it’s important you plan wisely.

Go Over Your Must-Haves

Finally, what are you looking for in a house that you don’t currently have in your apartment? Make a list of some must-haves that you need, such as more bedrooms, a garage, or a backyard, for example. You should also make a list of things you’d like to have but don’t necessarily need. That way you can focus more on the big picture when house hunting, and not get caught up in the extra nice things. Remember, your budget is important, and you should try to not sway from that.

In Conclusion

Buying a home takes a lot of time, effort, and money. It’s best you start preparing as far out as possible so that when the right time to buy comes around you’re ready and have minimal stress. Don’t rush into buying a home without planning ahead. Take your time and follow the four tips laid out here.