With rising rent prices, renters across America are looking for alternatives such as buying their first homes. In 2021, the first six months of the year set records for the fastest rising rent prices since 2017. Many renters see that it’s no longer convenient to drain cash on rent every month when their money could be going toward equity.
Preparing to Shift from Renting to Owning
For the first time in their lives, millions of Americans considered buying a home after a lifetime of renting. In the past, renting was convenient for young people who couldn’t afford a down payment on a home or moved around the nation frequently. Home buying usually requires more of a long-term commitment unless you’re in the business of home flipping.
The first step in transitioning from renting to owning is building a savings account to build a capital base. The bigger your capital base, the bigger loans you may qualify for. Financial experts advise starting a “sinking fund,” in which you create separate savings account from an emergency fund. Your sinking fund can be available for short-term expenses but should gradually keep building.
Build Your Credit
The next step in your shift from renter to owner is to work on building your credit score. Your FICO score is based on multiple factors, particularly paying bills on time, amount of credit, and level of debt. Credit scores of 700 to 900 are in the acceptability range for most conventional mortgage lenders.
A credit score below 700, however, indicates you have somehow experienced problems with credit. It can be a red flag to lenders who have been late on bills, racked up excessive debt, or had other difficulties in maintaining financial responsibility. If your score is under 700, lenders may consider you a high-risk target and either deny loan approval or offer you a higher interest rate.
New Thinking Toward Sustainable Investing
The pandemic era and its aftermath are a period of financial transition for millions of Americans. It’s a period of rethinking goals and budgets for meeting goals. One of the major themes in this transformation is sustainability, which seeks to reduce wastage while improving quality of life. Rent was convenient before it got expensive, but now it’s time to think about preserving the value of your efforts.
It would be best to plan for the future within your economic means to achieve stability and efficiency. One of the advantages of buying a home is renting out rooms to help pay for the mortgage. The idea of home investment fits into sustainability as money that was once drained on rent can be used on assets that grow in value.
First-time home buying is growing in demand due to high rent prices across America. Families cannot afford to throw money away on rent when they could be building assets for the future. For more information on home buying, contact the experts at Brighton Escrow today. We are ready to listen to your interests in real estate and help you achieve your goals.