You’ve made the bold decision to move from renting to owning and you couldn’t be more excited. Congrats, it’s a big step into adulthood!
However, a lot is going to change from now on. Let’s dig into what steps you’ll need to take, what finances you’ll need, and the responsibilities of owning versus renting.
Your Timing Will Be Critical
In order to transition from renting to owning seamlessly and without too many expenses, you’ll have to pay close attention to timing.
The first step is to re-familiarize yourself with your lease terms, the standard notice you’ll have to give is 30 days. If that’s the case, you’ll be able to hand in your notice after you’ve closed on your new place. The following game plan, as laid out by apartmenttherapy.com, serves as an example scenario.
- Pay rent on April 1 and close your home on April 25. About 5 days of pre-paid interest will be paid at the closing table
- Along with your rent check on May 1, put in your 30 days notice
- Your first mortgage payment is not due until June 1, for interest that accrued during May
- During the entire month of May, you have access to both your old rental place and your new home, without having to pay double housing expenses in May, for a nice, no-rush move
- That way, you won’t have a month with double expenses, and you have a full month to move
However, sometimes life happens and your closing might be delayed or your lease mandates a longer notice period. Check in with a Triplemint expert to make sure you’re not wasting time and money.
You’re In It For the Long Haul
As a renter, you’ve probably signed a 12-month standard lease, or, if you scored a concession, a 14-month lease.
As a buyer, this commitment stretches to at least four to five years, since this is the recommended investment time for a homeowner. Be aware of this long-term commitment and make sure that your apartment is the perfect fit for you.
The beautiful part about this is that now you can actually afford to buy something that really suits your wishes, whereas when you rented right out of college, staying within your budget was your number one priority.
Your Wallet Will Thank You Later
Owning your very own home is an incredible feeling, being able to afford all the upfront costs means you’ve been doing very well for yourself. However, a 10-20 percent down payment is just the beginning.
So what costs will you have to keep in mind? According to 360training.com, you’ll be faced with:
- Monthly mortgage payments
- Property taxes
- Homeowner’s insurance
- Homeowners’ Association (HOA) fees
- Emergency repairs
While this list may seem a bit intimidating, connecting with the right experts will help you keep your budget in order, while ensuring you’ll be able to cover both the upfront and monthly costs.
Meanwhile, here’s a pretty good upside. As a renter, you’re basically paying your landlord’s mortgage, but as an owner, you’ll end up getting to paid to live in your own place through appreciation.
The New York City real estate market has a known history of rising home prices. That means, if you buy now you’ll be able to get a good return on investment in about 10 years.
As Urban Digs reports, the median sale price for a home in Manhattan was $1,184,700 in December 2017, an increase of just under 12 percent compared to the prior year.
You’ll Be Responsible For Everything
“With great power comes great responsibility.” While this quote is said to have originated in the French Revolution (and you probably know it from Spider-Man), we believe it fits homeownership perfectly. You won’t have a landlord watching your every move anymore, but that also means you won’t have a super who can cater to your every maintenance need.
Consider this a challenge that you can rise to. When before, you used to pick up the phone for every toilet trouble or faulty faucet, now you’ll be forced to do it yourself – and succeed. Alternatively, you can always pay to get it fixed. Startups like Handy offer a wide range of services, like plumbing and electrical.