Although the reasons for purchasing a home can be complicated, such as the need to relocate for a job or secure a bigger space to accommodate an ailing parent or family member, other times it can be just as simple as growing tired of paying rapidly rising monthly rent.
Although the financial benefit of buying over renting varies from market to market and household to household, three lifelong renters decided to make the jump after years of navigating the rental market. Here’s what they had to say about the tipping point that pushed them into homeownership.
Ditching rent to build equity
Name: Candice Jackson
Candice Jackson was tired of paying rent. Although Oklahoma City ranks among the nation’s most affordable markets, year-over-year rent growth has reached 4 percent — 1 percent ahead of the current national average of 3 percent.
Jackson worked two jobs with the Oklahoma Department of Health and ICE Event Center, a local restaurant and bar, to take care of herself and her teenage son, Adam. As the years ticked along and rent rose, Jackson wanted her hard-earned money to at least benefit her family.
“I wanted to build some wealth and have something to leave to my son,” she told Inman. “I had been going back and forth with the decision for a while. I actually applied on a whim. I got the approval and just went with it.”
Although her decision to apply was “on a whim,” Jackson had spent two years preparing for homeownership by paying down debt and increasing her credit score so she could easily qualify for the home she wanted. After getting approved, Jackson and her agent hit the pavement and began searching for homes.
“I don’t believe I had a typical search. It was over really quickly,” she said while noting Oklahoma City had plenty of existing and new-home inventory. “I only looked at about 10 homes and the one I chose was number six. I looked for about two weeks before making an offer.”
Jackson and her son moved into their new home in January, and now she’s looking forward to making the space their own — no landlord permission needed.
Although she plans to stay in the home for the foreseeable future, Jackson said she learned a few valuable lessons about the mortgage process that she’ll keep in mind.
“I didn’t realize how important your debt-to-income ratio really was,” she concluded. “I knew it was considered for your loan, but I didn’t realize it would affect me being able to qualify for down payment assistance. Because of that, I had to provide a lot more cash at closing than I originally planned for.”
All you need is a little help from your friends
Name: Kittie Walters-Farmer
Like many college students who stay behind after graduation, Kittie Walters-Farmer quickly found out how expensive Austin, Texas, truly is now that she couldn’t rely on dormitories. The aspiring musician and public servant spent years moving around Austin, scrambling to find the most affordable apartments that kept her near the city’s famous music scene.
However, the search for affordable listings became harder and harder to do, as inventory tightened and prices increased a whopping 93 percent from when Walters-Farmer first came to the city almost a decade ago. In addition to rent hikes, she was tired of being subject to the whims of landlords who would sell their properties at a moment’s notice.
“I knew that if I could get a fixed-rate mortgage, my monthly payment would never increase,” she said. “Additionally, I was tired of renting because oftentimes I would be forced to move when the landlord sold the property. I wanted a stable home where I could settle down and not have to move so much.”
With a steady job and income secured, Walters-Farmer began scouring the Austin market and hired a friend, who is a real estate agent, to help her find the perfect condominium within the city limits. She spent a few weeks touring potential homes with affordability topping her “must-have” list.
“My decision was ultimately based on price, since I make a modest salary and homes within the Austin city limits tend to be quite expensive,” she said. “A condo popped up that was somewhat central for a great price, and we moved on it quickly.”
Thankfully, her parents were more than happy to help her with down payment and closing costs, and the loan officer, who had a close working relationship with Walters-Farmer’s agent, found the perfect loan despite her limited credit history.
“The major roadblock was that I had never taken out a loan of any kind at the time, and I only had one credit with a very low credit limit,” Walters-Farmer explained. “Therefore, I was mostly without a credit history, which made the process take a little longer.”
“In the end, the folks at the bank ended up pre-approving me for a home loan and getting me a great rate and a super low down payment, and I am forever grateful to them for going above and beyond for me,” she added.
Looking back on her purchase, Walters-Farmer is happy she made the jump (which was expertly planned as she got married soon after). Although her and her husband are enjoying rocking out in downtown Austin, Walters-Farmer said she’ll consider things such as property taxes and upkeep when calculating the affordability of their next home.
“I know this is something I should have known beforehand, but I wish I had realized that rising property taxes would in fact make my monthly housing costs increase over time since my property taxes are paid through an escrow account,” she said.”But, if I had to do it all over again, I would not do anything differently.”
“I really owe everything to my parents, my friend/broker, and the great folks at the bank,” she concluded. “I did not do this on my own, not by a long shot.”
Name: Veronica King
Although rising rent prices certainly played a factor in single mother Veronica King’s decision to purchase a home, concerns about her and her son’s safety was the final straw.
“I needed a home for me and my son,” she said. “I was renting an apartment and my neighbors, who lived above us, got into knock-down, drag-out fights almost daily. My mind was made up on getting a house after a man got shot and killed in our apartment complex.”
Desperate to get out, King began reviewing her finances and realized it would take plenty of hard work to repair her dismal credit score.
“My credit score was in the toilet when I started my process,” she explained. “I had been a victim of identity theft which made my credit score drop somewhere around 400 to 500. So, I began reading up online about what it takes to increase your credit score.”
She requested a free copy of her credit scores from Experian, Transunion, and Equifax, started disputing negative items and negotiated with bill collectors.
“A lot of negative items were removed from my report as a result which caused my credit score to go up,” she said. “I also reached out to some bill collectors and spoke with them about what it would take in order to get them to remove their negative items from my credit report.”
“I also decided to get a credit card and make small purchases and pay them off after two weeks,” she added. “My credit score went upwards around 670 which made me eligible to buy a house.”
King was finally able to move out of her complex and move into a quaint home in Bryant, a small city south of Little Rock.
“I wanted a place for my son, Josiah, to call home. I also wanted to leave behind something for him,” she explained. “I guess I wanted better for him than what I had experienced in my upbringing, regarding homeownership.”
“I think the biggest wake-up call was when I realized that I was paying for something that I would never own. I felt as if I was just flushing money down the toilet.”
If you have a client with a unique story to share about his or her financial journey to ownership, drop us a line at Homebuyer@Inman.com.