So you want to buy a house… you’ve decided that you can afford a mortgage, insurance, and the inevitable repair bills? And it’s better to be building equity of your own than paying someone else’s mortgage, insurance, and repair bills like you do when you pay rent, right?
But, do you really know what it takes to buy your first house? Have you really investigated anything other than looking at your “dream home” on the real estate websites? If you’re like most first time home buyers, the answer to that question is a resounding “NO.”
The truth is, there’s a lot more to buying a house than just looking at homes, then going to the bank and getting the loan. A. Lot. More. In fact, getting your first house may very well be the hardest thing that you will ever do financially… you’ll find yourself digging for bits and pieces of your credit history, check stubs, tax returns, and so much more, just to get approved for the loan. And you’ll need a lot more money than just the down payment that the bank asks for up front. Trust me, it can be a long drawn out process, and you’re never really, really sure that it’s all going to go through until the moment when you finally sign all of the paperwork and they hand you the keys to your new home. (And that, too, will happen eventually!)
So, what can you do up front, before you actually find the home, make the offer, and then go to the bank? Well, first and foremost, if you’re thinking about buying a home, you need to start with your credit score. If your credit score is below 600, you’re going to have a hard time finding a mortgage lender who is willing to work with you, and if you do, you’ll likely pay a higher interest rate than if you start out with a credit score in the mid 600’s.
Don’t know your credit score? Well, that’s the absolute first place to start anytime that you want any kind of credit, be it a mortgage loan, an auto loan, or even just a credit card.
Of course, there are lots of places where you can get your credit score for free these days, and most of them are really good, but sometimes to get your full credit report as often as you’ll want to while you’re in the process of buying a house, it’s better to pay for credit monitoring for a few months. That way, you can keep a really good eye on your score, and if your score isn’t where it needs to be, you can check it frequently while you work on cleaning up your credit to get ready to buy the house of your dreams.