Preparing for homeownership while renting can put you in a better position when you're ready to buy. Here are three actions you can take:
Test the Budget
Estimating how owning a home will affect your budget is crucial. You can work with a REALTOR® to determine how much you can afford, including potential mortgage payments, local property taxes, and repair costs. For example, let's say you currently pay $1,500 in rent and your monthly income is $5,000. After consulting with a REALTOR®, you find out that you can comfortably afford a mortgage payment of $1,800 per month. This knowledge allows you to plan your finances accordingly and start saving for a down payment.
Check Your Credit
Before applying for a loan, it's essential to review your credit report. Request a free credit report to see what a lender would see. If you spot any errors, you can correct them before they impact your ability to qualify for a mortgage loan. Additionally, you can take steps to improve your credit score, such as paying off outstanding debts or setting up automatic payments. A higher credit score can lead to better loan terms and interest rates, saving you money in the long run.
Create a Wish List
While no home may offer every desired amenity, having a general idea of what you're looking for is important. Make a wish list that includes your must-haves and nice-to-haves. For example, you might prioritize having at least two bathrooms, but you might be open to a smaller kitchen or a house with an exterior that needs some cosmetic updates. This helps you focus your search and makes it easier to communicate your preferences to a REALTOR® when the time comes.
Remember, it's never too early to consult with a REALTOR®. They can guide you through the homebuying process, answer your questions, and help you avoid any surprises along the way.