Video: 5 tips before buying a house
Protect your credit and score rewards
If you’re joining the crowds during house-hunting season, be sure to follow these five tips to protect your purchase and your credit and score some card rewards in the process.
1. Clean up your credit.
The first step to preparing for a home purchase is cleaning up your credit. At least three to six months before applying for a loan, make sure you’ve looked up your credit report at annualcreditreport.com and dispute any errors you see or settle any unpaid bills. Ideally, your credit score and that of any person who will be on the loan should be above 740 so you can get the best interest rate available.
2. Save up 20 percent.
To avoid private mortgage insurance or PMI, you’ll want to have 20 percent of the purchase price of your home as a down payment. If you don’t, perhaps putting off that home purchase or going with a more affordable house are better options.
3. Sign up for a great credit card deal.
You’ll want to avoid more debt if possible, but the fact is you’re about to spend a lot of money on moving costs, furniture and repairs. Don’t let that spending go to waste. Find a great credit card deal with a big sign-up bonus so you can rack up major rewards that you can enjoy later. A cash back card or a 0 percent interest card are also options depending on how much you need the cash over the rewards.
4. Shop around for a good mortgage rate.
If you look at multiple mortgage lenders within 30 days, the bureaus will not consider this as multiple hard pulls on your credit. So, just because you gave your information to one loan officer doesn’t mean you’re stuck with that lender for fear of getting another credit hit. Shop around and secure the best inerest rate possible, knowing your credit score is safe.
5. Don’t drain the bank.
While it may be easier said than done, be sure you don’t drain the bank with your moving costs, furniture and down payment. Houses often come with surprises sucvh as repairs and faulty appliances, which may take precedence over a new couch. Try to put your furniture on an interest-free card so you can have cash handy in case of life’s little surprises.
By following just a few tips, you can enjoy your new home and keep your credit intact, too!
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