I know it's an odd title and even more of an odd question. But, I am addressing this because I've had a lot of first time home-buyers make statements like " I've been renting for years, why is it so hard to get a mortgage when I've been paying for years" or a statement like " It's like jumping through hoops to get a mortgage. I've been paying rent, isn't it the same thing?". Actually, no it's not. It isn't the same at all. In fact renting a home is very different than owning a home. Here is why.
First, when you are renting you are paying someone Else's mortgage and/or providing a second income or savings for the homeowner in the event there home is paid for. Regardless of whether you pay rent or not, the homeowner still has an obligation to his mortgage, taxes, insurance and repairs. While you may have a lease you are really under no obligation to the homeowner. Essentially, you can leave anytime with or without notice and the loss to them will be minimal providing you didn't trash the place ( I would like to think no one would do that ). Basically, you are in a dating relationship with your rental. Its fun, it's good for the moment and comfortable, but there is no real commitment. Not by you or the homeowner to you. Either of you can walk away. Not to mention you are under no obligation for repairs. If the furnace goes down or a storm takes out the roof, you are under no obligation to remedy the damage and in fact you can easily relocate without batting an eye.
When you own your home you have essentially gone from dating to marrying. It's harder to just walk away from a marriage. There is a lot invested on both sides. Time, money, sweat and tears. You are in a committed relationship and it's a costly one to just walk away from. Not just for you but also the other person (financial institution). Hundreds of thousands of dollars are at stake, not just a monthly rental payment or perhaps the duration of the lease if you vacate early. There is no one to call when the furnace goes or the storm takes out the roof. It's you. The weight of the relationship is on your shoulders and you will have to work hard to maintain the relationship/marriage so that it stays healthy.
Renting is dating - owning is a marriage. And, I am sure you would concur while both can be an investment, they are very different. If you are dating and you can no longer stand to be in the same room with each other essentially you can leave. If you are married you try a little harder to work through the problem because leaving isn't as easy. This is exactly why everything is scrutinized more when you are obtaining a mortgage. While they are looking at how you have paid your bills and managed your money, they are looking at a whole host of things to determine if you will commit to the relationship. Will you be able to afford repairs as they occur whether big or small or whether deductibles are involved with insurance. Will you be able to maintain normal wear and tear? Will you commit to the agreements, the payments long term not just for a year or maybe two. Do you have enough money saved in the event of a job loss to cover your expenses? It is no longer just your investment. It is also the banks investment and they want to make sure they won't lose money down the lane.
While the mortgage process may seem daunting, be patient. It will be worth it in the end. This is your opportunity to own the American dream and make an investment in yourself and future. You can get a head start by speaking with a mortgage professional and gathering documents and/or information they will require. They will work with you on documents you need, employment and salary verification and lead you in the right direction should you have any credit issues.
It's equally important to work with a Licensed Realtor who will have your back through the process. From contract and negotiations to working with your lender and making sure things go as smoothly as possible for you. Remember, just because you qualify for a specific amount doesn't mean you have to spend it all. There are great houses out there that can be upgraded later if that means not over extending yourself. You're about to get married and just like you would make sure the officiant is licensed to make your marriage legal, you want the same for the home buying process.
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