Homeownership certainly comes with its fair share of advantages. However, before you own your first home, the chances are that home rental is the immediate alternative. But how can you transition from renting a home to owning a home?
Planning your rent cycles should be a priority to ensure you are saving enough money to help you achieve the homeownership dream. For many tenants, how to formulate rent cycles to achieve maximum benefits seems challenging.
In this post, I feature crucial tips to help you formulate rent cycles. The information will help you in transitioning from home rentals to homeownership. Keep reading to discover the essential tips
1. Research the Rental Rates
Consider that the global pandemic has disrupted many businesses. As a result, many first time home buyers cannot afford to raise down payment. The only alternative is home rentals, and this has seen the demand for rentals going up. In that regard, you must research the rental rates in your area to know how much you part with monthly.
Determine the state or the city you wish to live and research the average rental amount. Remember to check the rental price for different types of homes. The importance of examining the rental rates is to make sure you are renting within the accessible areas.
2. Know-How Much You Can Afford
The ultimate goal is to transition from home rentals to homeownership. In that regard, you want to make sure that you have some savings to pay down payment and closing costs. Thus, if you spend more on rent that you can afford, you will not meet the objective.
To determine how much you can afford rent cycle payments, select the current total income and the total monthly expenses. Find the difference to see how much you can afford to spend on rent cycles. Be sure to save a percentage to fund your objective of buying your first home.
3. Find An Alternative Source of Income That Can Pay the Rent
We advise home renters not to depend on their primary source of income to pay rent. If you can get a side hustle, use the amount earned from the side job to pay rent. side hustling helps you raise a significant supplemental income that you can use to pay monthly rent. Ultimately, you will be able to afford a new home. Where the side gig’s earnings cannot pay the entire rent amount, you can save the income.
4. Be Sure Your Budget can Support Additional Expenses.
When getting ready to rent a home, know what you are on the hook for. Check if the potential landlord expects you to pay all utilities, which include electricity, gas and water, phone service, TV service, parking, and so much more.
Do not be afraid to ask the average cost of utilities? This helps you to plan your rentals budget. Bear in mind that the average expenditure on utility bills depends on individual consumption. You can save on utility bills by controlling how you turn up the air conditioner, ensuring taps are switched off, and several other approaches. Saving on utility bills goes a long way in helping you afford the down payment and property closing costs.
5. Pay Rent on Time
Falling behind on rent puts you at the risk of being denied credit in the future. Therefore, you should pay rent at or before the due date. A bad credit report affects your acceptability as a tenant in future. Note that property management companies and property owners will check your credit score to determine your suitability. Therefore, be sure to pay rent on time.
6. Consider other Alternatives to Renting
Other than paying rent, you can ask to live with your relatives as you plan your home ownership journey. Talk to a close relative, and agree whether they can host you for a while as you save money to pay down payment. Alternatively, you can share home rental cost with a college mate. Do not use the money saved on parties and other none essentials. Be sure to save so that you can afford the down payment and the closing costs.
7. Know How Much a New Home Can Cost
We have looked at different alternatives for renters to raise down payment money and the closing costs. It is necessary you research the housing market so that you know how much to save, to afford the down payment and the closing costs. With the cost of homeownership in your mind, the closer you are getting to achieving the objective.
Buying a new home comes with so much excitement. However, we all begin at some point. Are you living in home rentals but aspiring to transition to homeownership? Follow the tips shared above to help you achieve the objective.