Renter to Home Owner

 

The New Year is here and most of us have at least thought of one or two personal resolutions or goals for the new year.  If you are a renter, it has probably crossed your mind that you would like to someday own your own home.  We have partnered up with Family Mortgage to come up with some helpful tips to make this goal a reality in 2015. 

Did you know that 65% of households in the US are owner-occupied while 35% are renters.  The largest group of renters are between the ages of 30 to 44 years old as stated by NMHC tabulation of 2013 American Community Survey. After doing some research we found that home owners pay on average about 15 percent of their incomes on their mortgages, whereas renters pay nearly double that amount according to CNBC.  Therefore the reason most renters aren’t able to transition to buyers is because it is difficult for them to come up with a down payment when they have an entry-level salary and so much of it is going to their landlords.  With that said, Dave Ramsey has some proven steps that you can take to add more cash to your piggy bank. 

Some steps to speed up your savings account:

  • Get an extra job and save the money that you make from that job for your down payment only.
  • Adjust your withholdings on your W4 so that this year you get money back instead of owing Uncle Sam!
  • Sell things that you no longer use or that you don't need.
  • Have a conservative price range and keep your mortgage payment 25% or less of your take-home pay on a fixed rate mortgage.

Once you have money saved up for your down payment then comes the pre-approval process.  You will want to sit down with your mortgage broker and talk about your specific wants and parameters.  It is important to discuss what it is you are looking for in a home, the purchase price, how much of a down payment you have saved up, and how much your ideal monthly payment would be.  (Remember you will want your mortgage payment to be 25% or less of your take-home pay.) 

Some things that you will want to make sure you have prior to being pre-approved for a loan would be:

  1.   Most recent paystub
  2.   2013 & 2012 W-2’s – if applicable
  3.   2013 & 2012 Personal Tax Returns- All Pages
  4.   2013 & 2012 Business Tax Returns- All Pages
  5.   One months- checking, saving, money market, brokerage account statements
  6.   Copy of Driver’s License

One thing to remember is that during this process actual cash deposits are not allowed into a bank account with obtaining a mortgage.   So if you decide to sell a big ticket item get a check and receipt from the buyer.

Another good thing to keep in mind is not to open any new credit cards while searching for a home.  Even though it may take you a few months from the time you get pre-approved to find a home your credit will be ran again once an offer is made and any new credit card accounts or large charges may actually hurt you.

Find your dream home

Resources:

http://www.nmhc.org/Content.aspx?id=4708

http://www.daveramsey.com/blog/make-it-happen-dream-house

Dylan Snyder is a seasoned real estate professional serving the Jupiter real estate market, Palm Beach real estate market, Palm Beach Gardens real estate market, North Palm Beach real estate market, and the surrouding Palm Beach County area. Along with being a top producer in Jupiter real estate, Dylan's professionalism and expertise in luxury and waterfront real estate sets him and his team of real estate experts apart from the competition. For more information on Jupiter and Palm Beach real estate for sale, contact Dylan at (561) 951-9301.

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