How to go from Renter to Owner

Weigh the Pros and Cons of Renting to Owning

If you are considering making the transition from renter to owner, you may have already weighed the pros and cons of renting vs. owning. If not, you might want to read Should I Buy or Rent?. It may seem easy enough but can get overwhelming if you are not prepared in knowing what to expect. We want to help you make an informed decision by providing a little background knowledge and a step by step process.

Find Out What You Can Afford/Get Pre-Approved

Once you have weighed the pros and cons and have decided that you are ready to go from renter to owner, the first thing you need to do is meet with a lender and get pre-approved. If you are not familiar with the process or why it is the most important step, you can find out more by reading Buyer’s Tip #1.

Some think it may be more important to choose an agent before going to a mortgage broker, but many agents will not take the time to work with you unless you have been pre-approved first. Showing you a home that you may fall in love with but cannot afford leads to you being a disappointed client and is a big no-no in this industry. We know that clients new to ownership may need a little extra support, so you can contact us if you need help with this process or if you just need the contact info for some local, tried and true lenders.

Fully Understand the additional Costs and Commitment

In addition to the cost of the home and closing, there is upkeep to consider. When you rent, it will often cost more than a mortgage payment, but the landlord is supposed to be totally responsible for the property. Help should be a phone call away. When you go from renter to owner, help can still be a phone call away, but you will have to decide who to call and the bill will come to you instead of the landlord. There is insurance, and a home warranty option when buying but they only cover certain things. We want you to be prepared for anything that might arise.  We recommend an additional savings of 1-3% a year, of the home’s value, for regular home maintenance, and anything that might suddenly need repair.

In addition to maintenance and repair, you will be responsible for insurance and property taxes. We recommend that you choose impounds at the close of escrow. This means that your taxes and insurance will be taken out little by little every month and applied until your home is paid for. It makes life a little easier but if you do not decide to take advantage of this option, can secure savings for these costs as well.

*We do have a list of local vendors in South Bay cities such as Hermosa Beach and Manhattan Beach that we use and trust. We are able to share these with you to help with the transition from renter to owner. Contact us if you are interested.

Get Educated About the Tax Benefits of Home Ownership

One of the benefits of going from renter to owner is that purchasing a home makes drastic changes to your tax liability. Did you know that the interest on your mortgage and your property taxes can be tax-deductible? Writing off these costs reduces your taxable income, which in turn reduces your tax liability every year for the life of your loan. 

Think Long Term

Going from renter to owner allows you a bit less flexibility to move around, so it is important to think long and hard about whether you are ready to commit to homeownership. Ask yourself the following questions:

•  Do I plan to stay in the same place for a long time?
• Does buying a home match up with my career and lifestyle goals?
• Am I prepared for the extra costs of homeownership, like maintenance and insurance?

Choose a Reputable and Trustworthy Agent

Once you have decided that you are ready, and you have been pre-approved, start interviewing agents. Choose an agent that has been around for a while, so they are knowledgeable and experienced, know the area, and have a good reputation. It should also be someone that is approachable so that you are comfortable with mentioning any questions or concerns.

It is important to educate yourself as much as possible. There is endless information on websites, and blogs, and through word of mouth, but there is always more to learn so choose well and do not be afraid to ask!

Happy House Hunting! We wish you the best of luck!

And Again! We are here to help if you need us!