Going From Renter to Homeowner

Buying a home is part of the American dream, but how much of it is truly dreamy, and what parts should people be better prepared for? When you make the switch from renter to homeowner, you can be hit with unexpected costs, lifestyle changes, and benefits that don’t reveal themselves until years down the line. Although going from renter to homeowner is a good financial decision, the realities of day-to-day homeownership can take some getting used to!

If you’re going from renter to homeowner status, go in with the full information in this comprehensive guide.

Additional Costs Beyond Your Mortgage

New homeowners focus on the size of their mortgage payments. That makes sense because your mortgage payments will be your major monthly expense. However, you need to be prepared for additional costs that you may not have had as a renter. These include:

Fees Associated with Closing On Your Home:

• • Home inspection fee
  • Title insurance
  • Title search fee
  • Appraisal fee
  • Lawyer’s fees
  • Recording costs
  • Mortgage application fees
  • Moving costs

These fees can add significantly to the cost of buying a home. On a $400,000 home, for example, they can add $15,000 to $30,000 to your costs beyond your down payment.

Other Costs

Emergency Fund

In home ownership, emergencies are a matter of “when,” not ”if.” At some point, you’ll need roof repairs, a furnace replacement, or an HVAC system repair. It’s wise to deposit some money into an account specifically for emergency repairs every month so that you don’t have to resort to credit cards or high-interest loans when you need this money.

Property Taxes and Insurance

Property taxes can increase annually, and in some cases, they can increase substantially. Insurance costs can also rise, especially if you live in a coastal area, a region that’s prone to damaging storms, or a part of the country that’s been affected by wildfires in the past. With flooding, fire, and storm damage claims always rising, many homeowners face large increases in their insurance premiums.

Maintenance and Repairs

When you switch from renter to homeowner, you have to take care of all the repairs to your property on your own. Even routine maintenance like gutter cleaning, HVAC servicing, and landscaping add up over the course of the year.

HOA Fees

HOA fees can be both good news and bad news for people going from being a renter to a homeowner. The good news is that they cover some of the maintenance and repairs to the property, but the bad news is that they can go up over time, and major repairs can require owners to produce additional funds, sometimes with short notice.

Utility Costs

As a renter, you may have had to cover some of your utilities, but as a homeowner, you have to cover all of them. The exception is if you live in a condo or a planned community where some of the costs are shared and/or covered by your HOA.

Lifestyle Changes

When you make the change from renter to homeowner, you become part of the community, which comes with benefits and some downsides. On the positive side, you’ll get to know your neighbors and develop some great, long-lasting relationships with them. You can usually count on your neighbors to look out for you, as you have a shared commitment to keeping your neighborhood safe.

At the same time, neighbors will expect you to keep your property properly maintained, and your lawn neatly cut. They will also object to you making too much noise, having visitors that raise eyebrows, or doing anything that could hurt their property values. Finally, you may get caught up in neighborhood relationship dynamics, which can involve conflicts among residents.

Home ownership also comes at the cost of flexibility and mobility. It’s not as easy to move, and if you do move, the expenses involved are much higher.

The Emotional Side

Going from renter to homeowner is an emotional journey marked by initial excitement that is quickly followed by an overwhelming sense of responsibility. It is extremely common for new homeowners to worry that they won’t be able to make their mortgage payments or meet other homeownership expenses.

Pride of home ownership is a real thing; you will be pleased with yourself for accomplishing this major life goal and be eager to show your house off to your friends and relatives. It’s an exciting time in your life, and you should enjoy it fully. However, you’ll also encounter problems that you didn’t expect and may not know how to handle initially; rely on more experienced homeowners for advice and guidance.

Going from Renter to Homeowner: Practical Tips

Making the transition from renter to homeowner can be stressful, but many other people have done it, and you can too! Here are some practical tips to make the shift easier:

• Learn about basic home maintenance: there are plenty of online videos, and home improvement stores often have free seminars to teach you basic things like plumbing, drywall repair, and furnace maintenance.
• Assemble a toolkit with the tools and equipment you’ll need around your home. This can be a great thing to ask for as a housewarming gift! Watch for sales on these items, as they’re often available at big discounts.
• Go to community events in your neighborhood to find out what’s going on and make new connections.
• Ask for advice from more experienced homeowners; people are usually happy to share what they’ve learned, and they may even lend you tools and help you out with tasks around your property.
• Learn how the systems in your home work so you’re up on routine maintenance and can diagnose issues when they come up.
• Figure out who your local politicians are and which issues they can help you with. They’re typically quick to respond to the needs of their constituents.

Benefits of Going from Renter to Homeowner

Once you’ve gotten over the initial shock of the “things no one tells you,” you’ll soon discover that the benefits of homeownership build steadily over time. You’ll get great satisfaction out of building equity in your home and investing in your local community. You’ll enjoy being able to make design and decor decisions without having to get anyone’s permission. Finally, you’ll be growing your financial stability as your investment in your home increases!