Homeownership is a complete U-turn for first-time buyers. Becoming a homeowner is an awesome responsibility, but it also grants access to a series of new opportunities that renters simply can‚Äôt tap into. The most simple of these new inclusions is the ability to hang pictures with nails, or throw away carpeting and change it out for new hardwood flooring without asking for permission from a landlord first. The ability to essentially do whatever you want with the space can be a liberating feeling for first-time buyers. But with this freedom comes a new financial responsibility that renters just don‚Äôt have to concern themselves with.
Maintain a freshly manicured credit score.
The first thing that you must concern yourself with is your credit score, especially because lenders are fascinated with this informative data point found in a borrower’s credit report. Prospective borrowers with an excellent credit score are often able to secure funding at a more favorable interest rate that translates into tens of thousands of dollars in reductions to the overall repayment figure. With a lower interest rate, you can enjoy more daylight in your monthly or yearly budgeting, or pay down your mortgage loan even faster. This is why experts in the real estate industry recommend starting to pay down revolving credit card debts six months or more in advance of a home purchasing opportunity. This way you can improve upon your credit score and create a more manageable debt burden in advance of taking on a new loan that will stick with you in the form of monthly payments, on top of your down payment, for the next few decades as you begin to enjoy life in your new house.
But repaying debts isn‚Äôt the only space where a credit card holder needs to focus their attention. In truth, online shopping affects home loan eligibility just as much as the overall level of debt that you owe back to your lenders. In addition to paying off your borrowed capital it‚Äôs important to cut down on new purchases with these cards in order to continue dramatically reducing your debt burden. The combination of a net-zero addition to the principal owed and aggressive repayment habits in the months leading up to a home loan application shows that a borrower is committed to healthy budgeting and understands the seriousness of borrowed capital and their obligations to repay these loan amounts. This is a serious win for a renter looking to become a homeowner.
Budgeting must take on a long vision.
Unlike the world of a renter, homeownership requires you to plan for the long haul. Home repairs often show signs of necessity in the years and months leading up to a failure in one of your key systems. Roofing repairs, for instance, telegraph themselves for years, sometimes even a decade, before they are required. Air conditioners, in particular, are features of a home that require routine maintenance, yet last for more than a decade on average.
Planning for these major home renovation requirements in advance of their ‚Äòdue dates,‚Äô so to speak, is the best way for a homeowner to keep in the black on their year-end financial report. Rather than having to rely on a new loan or credit card spending to hire a rain gutter installer, by planning for the eventuality of a foundation repair, gutter replacement, or washing machine refurbishment, a homeowner can stay multiple steps ahead of the financial burden that is surely waiting somewhere in the future.
Homeowners must remain prepared for these fixes. Renters have the ability to simply call up the landlord for a repair or replacement, but this is where their flexibility ends. As a homeowner, you are building wealth for the future simply by your ownership of a valuable asset. But preparation for the future is a critical component of this newfound financial strength.