Courtesy of Seth Murphy of PapaDIY.com
So you’ve found it: the home of your dreams, the place where you’re going to live out the rest of your life where you can entertain every weekend or spend evenings in quiet solitude. The idea of getting a new place (or a first place, for those new to the homebuying experience) is both exciting and frustrating, mainly because of all the minor details involved the process of buying — and keeping — your new house. But don’t let all the frustrations get in the way of your new joy. Consider trying these four tips as you go through the process.
Check Your Credit Report
While this is something you should do every year, it’s especially important during the homebuying process because sometimes there are inconsistencies among the records of three credit reporting bureaus, and negative information on any one of them can affect anything from the interest rate you get to even getting a mortgage.
Also, know the difference between a “soft” pull or “hard” pull of your credit report. A soft pull occurs when your credit score gets checked either by yourself or a potential creditor. A hard pull is when a creditor wants to see your entire credit history. More hard pulls will cause your credit score to go down. Be sure to ask a potential creditor what type of pull will be done on your report. And if you find errors, report them immediately. Casey Bond at U.S. News & World Report says it can take up to 30 to 60 days to resolve an error. So the sooner you catch it, the sooner it can be corrected.
Calculate the Monthly Costs
Many buyers know what to plan for when it comes to a mortgage payment, but a lot of people don’t consider other monthly fees associated with homeownership, including utilities, maintenance costs, and monthly homeowners’ association (HOA) dues if your house is located in an area that requires them. Use an online calculator to determine your basic monthly mortgage payment and HOA dues. To determine electrical costs, use a detailed energy costs calculator that can give you more than just a guesstimate of what you’ll spend each month. Other utilities, such as cable, satellite TV, home security, and internet service, might not change at your new home, but call those providers to see if they offer any relocation specials that can help you save money.
Keep Credit Spending Under Control During the Buying Process
Just because you found out you have a high credit score doesn’t mean you can get a couple new cars to go along with your new house or run up your credit card bills buying new furniture and accessories. Daniel Bortz writing at Realtor.com suggests that even closing out old credit cards would be a mistake. Why? It could harm your debt-to-utilization ratio, which is the amount of debt you’ve accumulated divided by the credit limit sum. This ratio makes up 30 percent of your credit score. So don’t overspend while you’re buying, but don’t close out all your unused accounts, either.
Try to Relax
While the process can be exciting, it can also be stressful because so many things could happen: the sellers could change their minds, the closing date could be changed (repeatedly), the home inspection uncovers a termite problem, or on the day of the move the truck doesn’t show up because the company went bankrupt the week before. While preparing beforehand can decrease your stress level, Tara-Nicholle Nelson at Business Insider suggests you focus on the word “one”: you only need to find the one house that fits your family, your budget, and your future. Will that take time? Certainly. But focusing on the one house might shield you from all the other noise that goes on.
By checking (and rechecking every year) your credit report, determining your specific monthly homeownership costs, controlling your spending, and keeping focus during the process, you’ll be better able to find and enjoy the place of your dreams.
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