If you’re going from renting to buying, you probably have some questions about your financing.
One of the most common questions I get asked is – “Do I need to have a 20% down payment?” The quick answer is – no! You can buy a home with as little as 5% down depending on what the purchase price is. There are only two situations where you would need to put down 20% – if you’re buying a property over $1 million or if you’re buying an investment property.
When determinng your down payment though, you should consider what your monthly mortgage payments will be. For example, if you have 5% down then what type of monthly payments are you going to be looking at? That’s a big part of the conversation when going from renting to buying. Make sure you’re budgeting accordingly. Figure out how much you can afford each month to still be able to have a life that you enjoy. If you enjoy going on a vacation once a year, then what type of mortgage budget do you need to stay within to still be able to afford that?
If you have a fairly good idea of what your future mortgage payments will be, start budgeting for that and putting it into practice. For example, if you’re currently renting for $2000 and you can budget $2400 towards a mortgage payment, start putting an extra $400 aside. Act like you’re making those payments now. This will give you a better feel for home ownership and what your finances will look like.
However, the best piece of advice that I give my clients is to stay in the range that they feel comfortable in. Even if you get qualified for way more, if you feel more comfortable paying less, then do your best to stay in that bracket. The last thing you would want is to be in a position where you have to sell your home because you realize you can’t afford it. This is why it’s important to have a Realtor® that will work with your goals and keep your budget in mind.
If you have questions about going from renting to buying, it’s best to speak with a Realtor®. They’ll provide guidance and will let you know what to expect in the buying process. They can also refer you to a reputable mortgage broker who can determine how much you qualify for and how much you should be budgeting for.
If you have any questions about going from renting to buying, or if you need a referral for a reputable mortgage broker, get in touch with me today. I’m happy to help out!