3 Things to Consider When Transitioning to Home Ownership

Rates of homeownership spiked during the coronavirus pandemic. A mass exodus of people fleeing crowded urban centers decided all at once to settle down in the suburbs and beyond.

Even rentals are flying off the shelves in less densely populated areas. It can be tempting to rush into what seems like a great deal without proper consideration if only because you know for sure it will not be there tomorrow, but you should use caution in Missoula’s ever evolving real estate market.

Here are 3 things to consider when transitioning from renting to owning.

Hidden Costs

Sure, a mortgage is generally cheaper than renting for a more sizeable plot of land…plus, you would have the benefit of owning it. Still, you can easily get blindsided by the hidden costs of home ownership if you have not adequately prepared.

Think of the ways in which things can go wrong in a home. Who will you call if your water heater bursts at four am? How can you afford to replace it? These are things savvy homeowners will know to budget for.

Of course, some of the more challenging aspects of home ownership also lend themselves to what makes owning a house so advantageous to the average consumer looking at their options. Even after taking into account property taxes, repair costs, and other hidden fees, you still come out of the other side with a larger chunk of equity than you would have if you were renting.

That is to say…you are going to come out the other side with any equity at all. Remember that when you are renting, you are not investing that money or you are not eventually going to end up with your residence paid off (not usually, anyway). More often than not, renting apartments is the cost equivalent of throwing your money into a pit in the long term.

When you own a house, that money is essentially becoming an investment. Later down the road, you can actually use your home as a means of securing a loan. This is called a reverse mortgage.

As explained by All Reverse Mortgage, “A reverse mortgage is a loan secured by your home. This allows you access to a portion of your equity tax free while still maintaining the title to your home. There is never a repayment penalty.”

Keep in mind there is no such thing accessible for renters in Missoula or in the country at large. Still, your home can lose value. Over time, some homeowners find themselves saddled with massive amounts of debt because the value of their home plummets. Renters don’t need to be concerned with that.

Social Aspects of Ownership

While home ownership is a pathway to community, a sense of belonging, and a more rooted sense of self, not everyone wants or needs those things to be happy in life. And this is something you should consider when purchasing a home in Missoula for the first time.

Buying a home in a neighborhood essentially marries yourself and your family to the people in the surrounding vicinity for however long it takes you to pay off your home, sell it, or die. You have no control over the people that live in your neighborhood or what those houses look like, so you should assume that what you see is what you get when you are house hunting.

Some neighbors are chattier than others. One thing to look out for when you are on the prowl for your next residence is how nosy the neighbors seem during an open house. You can even go so far as to survey them individually in person if you are serious about the property in question.

Home owner associations function similarly to leasing agents in apartment complexes throughout the company, but the vitriol with which people treat home owners’ associations is unmatched. This is because, in spite of the limited power of home owner associations, they are often overly aggressive in the manner with which they conduct their business.

Of course, many people who once dwelled in the tight quarters offered by apartments might miss the easy, unavoidable socialization that went on regularly within the confines of apartment buildings. From getting your mail to just opening the door and finding your neighbor standing on their stoop, apartments are a rich ecosystem of diverse lifestyles that would never have intersected otherwise. For some people, that is a harder adjustment to make than others.

Avoid Bloat

When moving into your new abode, try to maintain the same lifestyle you were maintaining previously to a reasonable degree. When upgrading to a larger space or a more luxurious home, it is easy to break the bank trying to match this fantasy you have concocted in your head.

But the reality is that while a new home is fun for a while, there will always be bills to pay, and a cute new bathroom vanity upgrade can wait.  You should try your best to live within your previously established budget—especially if you are upgrading to a larger space—and see what you can and can’t afford to miss.