Ask SCUDO! “Any Tips for going from Renting to Buying?”
Client Question: “I am tired of paying rent and am ready to purchase. Any advice on how to transition from renting to buying?”
- Check your credit. Take care of any errors or items negatively reporting. The minimum score for FHA is 580, and 620 for conventional. Keep in mind, the higher your score, the more favorable your loan terms will be.
- Learn your DTI (Debt To Income) ratio. Lender’s will use this amount to determine your loan eligibility and the amount approved for. A good rule of thumb is approximately 45% maximum debt.
- Get pre-approved. This is one of your best tools in your home search. Knowing what you can comfortably afford, and what amounts affect your payments will make you an informed Buyer.
- Ensure that you have “property reserves” to cover 3 months of mortgage, and any unforeseen expenses.
- Determine the amount of down payment you can afford with favorable loan terms. If you will be receiving a down payment as a gift, make sure you’ve spoke with your Lender regarding their “gift” requirements.
- Ask your Realtor for good vendor contacts. Regardless of your home’s condition at move-in, it will inevitably need a repair or upgrade. Most Realtors have a bevvy of contacts for any type of job needed and would be happy to share their Vendor’s contact info. Being armed with these contacts will save you time, and give you piece of mind when the time comes to hire.
- Make sure you are clear on the process ahead. Ask your Realtor to walk you through each step, and the closing timeline once you have a home under contract. Make sure everyone is on the same page regarding closing date, and what’s important to you during negotiations (i.e. closing costs, or making sure appliances stay, etc.)