My Story: From Renter to Homeowner

homeownerMy dream of becoming a homeowner started about 10 years ago.   After renting for all of my adult life, I was growing tired of sharing the laundry room, parking spaces and walls.  I was really looking forward to some of the perks of homeownership.

Finding the right rental

At the time, my husband and I were not ready to become homeowners but we knew we had to start planning for it. Our first rental after getting married was in an urban area where the rent was low and all utilities were included.  We lived there for about 3 years but then decided we didn’t want to deal with the hassle of street parking anymore and we wanted a safer neighborhood.  We started by finding a rental that included all or most of the utilities. Our strategy was to get the most bang for our buck and still continue to save for a future home.  After looking at a few places we decided on a nice and spacious one bedroom apartment which included all utilities except for electric. The apartment complex also had their own parking at no additional cost.

Compromise on your rental

We comprised on this because we originally wanted a two bedroom but they were a lot more money and not really worth it in my opinion.  We stuck to our strategy of getting an affordable apartment and we didn’t get lured in by fancy places that were overcharging because the rental was more modern.  I’m so glad we decided to rent the one bedroom.  I’ll be honest that the kitchen and bathroom were outdated but that wasn’t a deal breaker for us. The important thing was that our costs were low and we were able to save a lot of money on a monthly basis.

After finding the right rental we decided to live on one income in order to accelerate our savings.  We wanted to save enough to put at least 20% down and avoid paying PMI (Private Mortgage Insurance).  In a few years we achieved that and we were ready to start searching for a home.

Finding the right home

The year we started looking for homes was in the Fall of 2008. That was about five years after first getting married and we had lived in a couple of places by then.  We had a good knowledge about our surrounding neighborhoods and we felt ready to buy.  At that time home prices in our area were still pretty high.   We were looking to pay between $300k to $350k for a modest 3 bed, 2 bath home.  We were really just looking and kind of getting an idea of the market and the different types of homes out there.   We started our search on home sites such as Zillow and we visited a few open houses on the weekends.  It was very helpful to see what we could get for our money at the time and it exposed us to new neighborhoods we had not considered.

Don’t rush to buy

In 2009 we decided to put our home buying plans on hold.  The whole economy was just a mess and the housing market was as well, so it just didn’t feel right to make such a huge purchase at a time of such uncertainty.  I’m glad we decided to hold off because just three years later prices had plummeted.  In the meantime, we kept our savings in tact and actually had a bit more saved up.  Once the dust settled we entered the housing market again in 2012.  We ended up buying a home that was $100k less than our original budget.  Just a few years before this home would have sold for over $300k.  I know some of my neighbors paid that much for similar homes because they bought at the height of the market.

In the end several strategies helped us in becoming homeowners

  1. Our strategy of finding an affordable rental paid off.  We didn’t get lured in by fancy and expensive apartments.
  2. We compromised and found an affordable rental in a safe neighborhood with almost all utilities and parking included in the price.
  3. We lived on one income while we rented which helped us accelerate our savings.  It also kept us from over spending on fancy cars and other frivolous items.
  4. We stayed in tune to the economy and with how we felt about it and held off on buying at the height of the market.  This is an important point because buying a home can be very emotional and you can easily get caught up in the excitement of the house hunt.  Sometimes it’s worth taking a step back to reevaluate the situation.

Becoming a homeowner is a dream for many people.  Don’t get discouraged if you feel that it will never happen for you.  Start planning for it now. Keep an eye on the housing market.  Learn everything you can about homeownership and remember  there’s nothing wrong with renting.  Things happen for a reason but one day you will achieve your dream (if homeownership is your dream).  In the meantime, save, save, save.  Believe me, you will need that money when you become a homeowner and you will be happy you saved it.

Photo by: Flickr

Are you dreaming of becoming a homeowner? If you own, what advice do you have for renters who want to become homeowners?

Comments

My Story: From Renter to Homeowner — 22 Comments

  1. While almost everyone likes to say “don’t time the market” it’s hard to argue that the past couple years were a bad time to buy. A big reason I bought was because I thought prices were near a bottom, or at least had little room to fall further. The housing market changes a lot but I do think that people should generally take a pessimistic view and always factor in the risk of the market potentially dropping at any given time. If you can stomach that, you just might be ready to buy a home.
    DC @ Young Adult Money recently posted…Why a Balanced Life is OverratedMy Profile

    • I think when it comes to buying a home you should be cautious. For me it was more about a feeling. What I was hearing didn’t sound good and what I was seeing didn’t look right. I don’t know if that was “timing the market”. I remember taking a trip down to Florida in 2004 when the market was very hot there. We took a tour of the housing market and visited a few plots where they were selling newly built homes. These homes were selling like hot cakes. I’m talking about the minute the lots would open up they were gone. I remember saying, “this is crazy”. While others were jumping right in and taken over by the excitement it just didn’t feel right to me.

  2. Life is definitely about choices Raquel and it makes sense to make “difficult” choices where a rental is concerned than where a home is concerned. I agree that you should not compromise when you are talking about buying something, which is why you should make compromises as much as possible up until you buy a home. It was a really great strategy to accelerate your savings based on your apartment choice. We did something similar as well and we didn’t love the tiny apartment, but it afforded us the opportunity to save more for our home.
    Shannon @ Financially Blonde recently posted…Music Mondays – CompassMy Profile

  3. This sounds like a great strategy. I love that you lived on one income to accelerate your savings, too. That is something we are interested in doing down the road. I didn’t like parking on the street at our old apartment, either. While I don’t like fighting for spots in our current complex, it still beats that inconvenience. I have seen newer apartments going for several hundred more a month. They’re building like crazy here! If we didn’t get a deal on our apartment, we likely would have gone with a one bedroom as they are less. Going for all utilities included is great, too!
    E.M. recently posted…Pushing the BoundariesMy Profile

    • The utilities being included is important especially heating. If you can get the heat included in your rental that is a huge savings. Our winter bill was so low because we didn’t have to pay for heat. Since we only paid for electric our bill was about $40/month in the winter. Now we pay for both and that’s about $210/month on average in the winter.

  4. We’re hoping to move from renting to homeowners…well co-op owners so we’ll still have to share a laundry room, parking, etc. Soon after my wife and I married, we considered buying but it was probably better we didn’t since our financials were less stable and we weren’t sure where we wanted to live. The homebuyer’s tax credit was definitely tempting though. Now we have a better sense of where we want to live and what we’re looking for.
    Andrew@LivingRichCheaply recently posted…Why Do You Live Where You Live?My Profile

  5. I definitely dream of becoming a homeowner and have a savings plan to make it happen. However, even if I had the money now, I wouldn’t be ready. I love the house I’m renting, but I’m not sure this is where I want to plant my roots. I think another 2 or 3 years of renting and I’ll be ready to make the decision.
    Joshua Rodriguez recently posted…Debt Free In 2017…Our 3 Year PlanMy Profile

    • Definitely hold off if you’re not feeling it yet. I never like to hear people being pushed to buy just because the market is hot or the market is down. You should buy when you feel it’s right for you. Of course it helps if you can buy low but you can’t really time it.

  6. Living on one income is a real big deal. I think too many young couples get caught up in the two income career and can never pull back. Then when they have kids, there are difficult choices to make because they inflated their lifestyle beyond what they should have. It keeps many from experiencing home ownership the right way…which is keeping it affordable.
    Brian @ Luke1428 recently posted…Why I’m So Excited to Spend Money Again on Cable TVMy Profile

    • I’m glad we decided on the one income back then. It has helped us beyond buying a house. It teaches you how to control spending and live more modestly.

    • Thanks, it felt right to buy when we did. I’m hoping for that as well but I know they will increase slowly this time around.

  7. It’s amazing how “right” our instincts can be. Even though I am sure you wanted to buy a house badly earlier, aren’t you glad you waited until the timing felt right. Sounds like you made a great investment and saved yourselves a lot of money. We purchased our first house in 2012 as well. We got a good price and an amazing interest rate on our mortgage.
    Liz recently posted…May {in Review}My Profile

    • Yes, it was a long time coming for us. And even though we were feeling the pressure from others we held off. No one will be paying the mortgage for you so in the end you have to do what makes you feel comfortable.

    • Oh yes, that is good advice Holly. Don’t get lured in by mini mansions also. Our house is small but we can easily afford it and it’s really all we need.

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    • Yea, apartment living has it’s challenges. I will be very picky if and when I ever go back to that.