Getting Ready to Move Out of Your Parents House: Tips for Moving
Moving out of your parents and into your own house is a big deal. You might have been thinking about making this move for a while, and it will be a significant change to your life. It can be daunting, and without any experience of living on your own, you won’t know what to expect.
When you make the move out of your parent’s home, there is a lot to think about and plan for. We take a look at the things you need to consider before moving out.
Are You Ready?
Moving out for the first time is a big commitment, and you need to be sure you are ready for the responsibility it requires.
Even if you are only going to be renting, there are things you need to do to avoid having to move back in with your parents months down the line. Whether moving into an apartment or buying a house, there will be a lot to pay at the beginning, and you need to be ready for these costs.
Discuss Your Moving Plans
If you are certain that now is the time to move out, discussing your plans with friends and family can help. While your parents might be overly concerned about your choice, they will also be able to offer a different perspective that you might not have considered.
If you haven’t decided between renting or buying, discussing the issues might make your choice clearer.
Your parents might have valid concerns about your ability to afford a home, and they could offer financial help. They will also have knowledge that you can use to help you make a better decision about your move.
They might not like the idea of you moving out because it will change your relationship. They might miss you if you leave, and this could be the reason for their opposition. But if you plan to meet weekly or at least call them, some of their concerns might go away.
Deciding Where to Live
Whether you are going to be renting or buying, choosing where you want to live can be difficult. With many possible options, you will need to do some research. Perhaps you want to stay close to family or have a particular area in mind. Wherever you choose, though, it needs to be within your budget.
If you haven’t already decided on somewhere, here are some things to consider:
- The distance and journey to your job could limit your choices. If you are traveling to work 5 days a week, you will want to avoid a difficult or long journey.
- You might want to live close to friends or relatives, or perhaps you want to live further away from family.
- Are there facilities and services you need nearby? If you go to the gym a few times a week, you will want to be fairly close.
- What type of neighborhood do you want to live in? If you want a quiet life, then you won’t want to be close to bars and clubs.
- The cost of housing in the neighborhood will rule out some possible areas.
- Check the crime rate in the neighborhood, and visit at different times of the day to find out if it is an area you want to live in.
Renting a Home
If you decide to rent, how much can you afford to spend on the new place?
Generally, it’s considered that you shouldn’t be paying more than a third of your income before taxes on your rent. Though if utilities are included, you can increase this figure slightly. If you have other monthly expenses to consider, like student loans or car payments, you might want to spend even less on rent.
There will also be upfront costs when you decide to rent. This will include a security deposit and rent in advance, along with deposits to utility companies.
You need to know what needs to be paid and when. You will have to pay the rent on time every month, or your credit score could suffer.
If your finances make renting difficult, you could become a roommate to share the costs with someone else. This might also be a good option if your credit isn’t the best and you know the person you will be living with. They will be more likely to overlook bad credit when a landlord won’t.
There are some downsides to sharing a home, however. You will have less privacy and you may have to make lifestyle compromises. If the relationship with the other person breaks down, you might have to move back in with your parents. So choosing someone to live with can be difficult.
If you are looking for someone offering a room, there are scams you need to avoid. If the offer seems too good to be true, it likely is. If the advertiser doesn’t seem too concerned about how good of a roommate you will be, it might be because they are only planning to take your money.
Try making a list of the things you want from your accommodation and a roommate. Ask about previous roommates, and why they left. If anything doesn’t seem right, it’s better to keep looking.
Buying Your First Home
As a first-time buyer, many things about real estate can seem confusing. You may not know about all of the financing options available to you, and the cost and fees you will have to pay might be more of an unpleasant surprise than you expect.
If you aren’t ready for the costs you will need to pay when buying a home, you easily fall behind on your payments. If you are at risk of foreclosure, some scams could convince you they have the answers, but they will only make your situation worse.
Before you become a first-time buyer, you should ensure you are ready. You need to consider the following things:
- Credit score. The lender will use your score as a way to judge how much of a risk you will be. There are usually minimum score requirements. But even if you meet the minimum, there are better terms and lower interest rates available with scores above 720.
- Low debt. If you have a lot of debt, you will find your mortgage application is less likely to be successful. And if you do get approved, the loan is likely to be more expensive. Before you begin, reducing your debt or paying it off completely will make the cost of buying your home more affordable.
- Stable income. When you are approved for a mortgage, you could be paying it back for 30 years. The lender wants to ensure you are going to be able to do this, and that means they want to see that you have a reliable source of income. They will ask for pay stubs and W-2s to check your income.
- Be realistic about the costs. Even if you can afford the monthly mortgage payments, you need to factor in more costs than that. There are many expenses that you will face when owning a home. These include the down payment, closing costs, insurance premiums, property taxes, utilities, repair costs, moving truck, and moving expenses. Before hiring movers, check our list of common moving scams you should be on your guard against.
Deciding Your Budget
A large part of planning your move involves your finances. While this is important whenever you are setting up a home for yourself for the first time, it is more of an issue if you are buying.
Buying a home means you need a down payment and money to cover closing costs. You should also calculate how much you will be able to afford to spend each month on mortgage payments.
Check your monthly spending and compare it to your income. This should give you an idea of the amount you can afford to spend on paying a home loan, though you shouldn’t commit to spending all of your available cash to cover the mortgage.
Mortgage companies generally don’t want to see your debts exceed 43% of your monthly income before tax. Your debts could include credit card payments, student loans, and housing costs. With a debt-to-income ratio above 43%, many lenders will consider that you don’t have enough income to afford mortgage payments. If this is the case, you might be better off waiting and dealing with your debts before deciding to buy a home.
Creating a budget and evaluating your finances like this will provide a clearer understanding of what you need to do to buy the home you want. It will help you decide whether it is better to save for a large down payment or concentrate on paying off debts, for instance.
Set a Moving Date
If you set a date when you would like to be in your new home, it will help focus your attention on the task. There are many things to do when moving out, and a set date will help you achieve the goal.
The date you set will depend on many things, and whether you are going to be buying or just renting will be one of these. You should also consider the housing market and your financial situation. The housing market changes and some times of the year are better than others for buying. You might also need time to save for a down payment and closing costs.
Start Saving Money
Most types of home loans require a down payment, and if you have more money saved, you could get better terms and lower interest rates. You will need 3% of the purchase price as a minimum with a conventional loan and 3.5% with an FHA loan.
If you can save more money for your down payment, you could reduce the interest you will pay and avoid mortgage insurance. With 20% down you won’t have to pay mortgage insurance, saving a considerable amount each year.
But saving for a down payment isn’t easy. If you want to save enough, it might mean making some sacrifices and altering your spending habits. Though if you can do it, you will improve your finances in the long run.
When you buy a home, there will also be closing costs to pay, which could be as much as 6% of the loan amount. These costs will include mortgage company fees, appraisal costs, and fees for title searches, among other expenses. Along with these costs, there will be property taxes, utilities, and the cost of moving into your home to add to your expenses. Before you buy you have to be ready for these costs.
It is also a good idea to have an emergency fund so you can cover unexpected costs. If you have three months of living expenses and mortgage payments saved, you won’t have so much to worry about should you lose your job. While this might be difficult to save in the beginning, it could prevent foreclosure if things do go wrong.
Improve Your Credit Score
If you have a good credit history, you will get a better loan when you buy a home. If your score isn’t above 700 and considered good, there are things you can do to improve your credit score before applying for a mortgage.
Paying your bills on time is a very important factor in deciding your score. If you are struggling with bills, contacting the mortgage company to make alternate arrangements is better than missing payments.
Reducing the amount of credit you use is another way to improve, and applying for new credit can also harm your score temporarily.
There are different loan options and many mortgage companies to choose from. There are conventional loans and mortgages backed by the government, like FHA loans, USDA loans, and VA loans. These options offer different benefits, and some of them won’t be suitable for your situation.
You also need to carefully compare what mortgage companies are offering. While the interest rate is important, don’t ignore the fees and other terms they offer.
When you are happy with your choice, you need to get pre-approved for a loan. This will make it clear how much you can afford to spend, and sellers will take your offer more seriously. Then with the help of a real estate agent, you can begin your search.
Summing Up How To Move Out of Your Parent’s House
Moving out of your parent’s home isn’t an easy prospect. But if you don’t rush into it, and do some research, it won’t be as difficult as it might first appear. If you get this right, you can set yourself up better financially for the future.
While it is easier to rent a home, you might feel like you are wasting money and paying the landlord’s mortgage instead of your own. Though buying might mean making some sacrifices, it offers more stability and long-term benefits.
About the author: This article was written by Luke Skar of MadisonMortgageGuys.com. As the Social Media Strategist, his role is to provide original content for all of their social media profiles as well as generate new leads from his website.
We provide award-winning customer service to clients who need to purchase a home or refinance an existing mortgage.