There are two kinds of people: renters and owners. And they each tend to have horrible misconceptions about the other. One of those misconceptions is that one is better than the other. Which is better for you depends largely on the life circumstances you happen to have at the time. There are times when renting makes more sense, and other times when owning is the best choice.
But one thing is certain: If all you have ever known is renting, there is a steep learning curve when going from renting to owning. There are things you simply have no need to think about as a renter that can make or break your prospects as a homeowner.
One of the things you probably haven’t considered is what national title company you will be dealing with. If you are working with an agent, the title will be handled by whatever title service they choose. But if you are dealing with a sale by owner, you might want to have a more active role in who handles the title. You will also want to make sure you have sufficient title insurance in case there is a situation that puts your claim in doubt. This situation can cost you thousands.
When renting, you never have to think about who owns the title to your rental. That is one of the many professional services you don’t have to deal with as a renter. Here are a few others:
You might sign a lease for a year. But you pay rent one month at a time. You don’t have to pay 30 years of rent all at once. When buying a house, you do. It’s called mortgage. You get a loan for the total amount, then pay it back to the lender on a monthly basis.
Often, whether or not you can afford a particular home has less to do with the total cost of the home, and more to do with the terms of repayment. When you rent an apartment, the only terms are the rent amount and the lease duration. Your credit may determine whether are not you are approved. But it has nothing to do with the amount you pay on a monthly basis.
But when buying a house, nothing is fixed. You need a good lender to get the best terms. If you do not account for this aspect of buying, you will be stuck with unfavorable terms for your first home purchase.
Credit Repair Specialists
Your credit score does matter when you are renting. But it matters a whole lot more when you are buying. Some of the nicer apartment complexes will not rent to you if your score is not high enough. But if you do get in, you will not pay more than anyone else because of your credit score. Mostly, apartments are more concerned with your rental history than a high credit score.
If you want to transition from renter to buyer, you might have to find a credit doctor to help you increase your score before shopping for loans. Not all credit repair services are created equally. Do your homework. If you don’t repair your credit before shopping for loans, you could be denied, or worse, get a bad loan with bad terms. You don’t have to fix your credit before renting. But you absolutely do before buying.
Maintenance Inside and Out
One of the best things about apartment living is when something goes wrong, you fix it by picking up the phone and calling the super, not by opening your wallet. Owning a home means being responsible for all the myriad of things that will most certainly go wrong.
When the sink starts overflowing, you have to call a plumber that you didn’t budget. The grass has to be cut. And you are out of pocket for that tree limb that fell on top of your roof. It will serve you well to get to know a few people who are handy with repairs. And there are always repairs that need to be done.
Going from renter to owner means cultivating relationships with a new set of professionals. Beyond the title, you have to find a good lender, a reputable credit doctor, and a talented handy person for repairs. Also, renters need to consider other issues such as the costs associated with moving to a new home like buying new furniture, beds and mattresses, etc.