Want to Move from an Apartment to a Home? Do This
Millions of people who live in apartments do so temporarily, aiming to improve their financial situations, save up for down payments on homes, and eventually move out. If you currently pay monthly rent to a landlord, consider making a few financial moves that can get you started on a path toward homeownership. What are the most effective strategies?
Everyone's financial and life situation is unique, but there are some common ways that get good results. For most working adults, the first step is improving their credit scores. At the same time, it makes sense to invest wisely and make a detailed schedule of your milestones to buying a first home. Two other essential pieces of the puzzle are saving for a down payment and finding an experienced real estate professional who can guide you through the process. The time to start is now. Here are some suggestions for getting the most out of your efforts.
Optimize Your Credit Scores
Check your scores with all three of the major bureaus. By law, you get one free report per year. Go over the documents carefully and look up any terms or jargon you don't understand. If you find errors, contact the bureaus directly. If there are no errors, but you're not satisfied with your scores, take action to improve them. In most cases, that means paying down debt on credit cards and loans, not missing due dates on any financial obligations, and not applying for multiple loans or cards within a two-year period. Speak with a credit counselor for more specific assistance. It often takes about six months to see improvement in the numbers.
Acquire Rental Property Shares
Even while you reside in a rental property, you can earn solid returns on your investments by acquiring shares of properties. Those who opt for this approach have the chance to earn income on rental units and take part in price appreciation at the same time. For investors who don't want the problems that come with owning individual properties, like high initial costs and day-to-day management hassles, buying real estate shares makes sense. The best way to get started is to learn the language by reviewing a comprehensive glossary of real estate terms.
Make a Home Buying Schedule
Create a detailed list of milestones on your home buying journey, and plot your moving calendar complete with dates and what kind of professional help you might need with each one. Common mile markers include monthly contributions to a down payment fund, the dates you plan to set aside for house hunting, when you'll contact a real estate agent, and the target date for when you hope to move into your new residence.
Save for a Down Payment
For the majority of apartment residents who want to purchase a home, saving for a down payment is the biggest challenge. It's common for sellers and lenders to require between 10 and 20 percent of the purchase price as initial payment. However, there are numerous loan programs you can apply for that bring that number down. The key to success is working with a knowledgeable, licensed, experienced agent who can help you get into the home of your dreams.