Study shows that most renters fear home ownership because of the costs or the responsibility, amongst other things. No one can deny the costs associated with the purchase and maintenance, as well as the new level of responsibility. What if I told you that each of these fears can be tackled but it must first start with you wanting to defeat these fears. Homeownership is easily attainable, with these myth breakers I’ll reveal the real deal behind homeownership.
Fear of bad credit/lack of credit
Let’s face it, it is hard to buy a home with bad credit or little credit. However, it is simple to get pass these issues. If you have no debt, then build some by opening a secured credit card or store credit card and paying it off each month on time. If you have bad credit, consult with a credit repair company or pay the debt down and have it deleted. Yes this may seem like a lot of work but the first step of overcoming fears is to just do it. Once you get started you will be amazed at how quickly your credit starts to improve.
For FHA loans you only need 580 to qualify for a mortgage. To qualify for down payment assistance you need a 640. For most conventional loans a score of at least 720 will qualify for a mortgage.
Fear of too much maintenance
The best part of being a renter is being able to call the property manager or maintenance technician and requesting a service repair. This is so awesome because you call and usually you do not have any extra out of pocket expense for this.
The good news is that homeownership is pretty similar. When you purchase a home it is important to have a home warranty and homeowners insurance coverage. The home warranty is for any systems and appliances in the home that may malfunction or need repair. The homeowners insurance protects you from any damages or issues that may occur to your home or within the property.
Both of these expenses can be paid in advance at closing by the seller. Yes not you, but the seller can pay for up to one year for your expenses. After the first year these are annual expenses that you would pay but the costs are very minor compared to if you did not have this type of coverage.
A typical home warranty can cost about $400/year. A homeowners insurance premium for a 4 bedroom single family home can cost about $800/year or $66/month.
Fear of expensive purchase
Buying a home will probably be the most expensive purchase of your lifetime. Its best to start saving up for this investment sooner rather than later. For a first time home owner you can pay as little as 3% down payment, plus up to 3% for any closing costs.
Example: A home is listed for $165,000 and at closing you will need 6% of this amount for down payment and closing costs. (165,000 X .06)=$9900 is the minimum amount of savings you’ll need.
If you do not have the full amount saved up, no worries, there are plenty of programs available to assist first time home buyers, veterans, teachers, police officers, rural home buyers, doctors, and firefighters. One of the most popular programs for teachers and first responders is HUD’s Good Neighbor Next Door program, where you can get a home for 50% of the purchase price. In NC first time home buyers may qualify for up to $7500-$15,000 in down payment and closing cost assistance.
Yes, there are solutions for the expense but it is definitely smart to save and show your ability to budget wisely before becoming a homeowner.
Fear of extra adulting
Overall being a homeowner is certainly a new level of adulting. But it should be looked at as an achievement not some drastic burden that will confuse your life.
Adults know how to be good stewards of their money and make wise investments. Purchasing a home is the wisest investment you can make, especially once you realize how much you are investing into your landlords life. Become the lord of your own land!
As a responsible adult, homeownership is a sign of freedom and a sure sign that you are leveling up in life. Go through the experience and use it as a tool to help other friends and family who are still stuck on the hurdle of whether they should purchase a home or not.
Hopefully these myth breakers have helped you realize that you should begin the process towards homeownership. For any questions about this post please contact me directly at firstname.lastname@example.org.