By Brittany Fisher brittany@financiallywell.info
Let’s face it – selling your current home, finding the perfect new home, lining up financing and physically moving is an arduous process. The uncertainty and anxiety can lead to many sleepless nights, and you’re never sure things will work out until they actually do. Here are a few personal finance hacks to help the process move a little easier for you.
Do Your Research
Start by doing your research, especially by looking up the average down payment in your target area. This will give you an idea of how much you need to save in order to buy your new home. You should also try to find out the average sale price of homes based on the past month, to help you determine whether you can afford to live in that area. For example, homes in Asheville have sold for $321,000 on average over the past month.
Know Your Credit Score
You should check your credit score at least once a year anyway, but it’s particularly important during the home-buying process, because the interest rate on your mortgage depends at least in part on your credit score. Check your report for any errors as well. It takes a few weeks to clear up any mistakes, and you don’t want them sitting on your report as you try to buy a home. Make sure you don’t have many “hard pulls” on your credit report either, where a creditor is checking your entire credit history. This will cause your score to drop as well.
Plan for Monthly Costs
Most people buying a house understand the costs involved with a mortgage, including insurance and taxes, but you also have to plan for several other monthly costs, including utilities, maintenance costs and even dues to your homeowners’ association (HOA). A good energy costs calculator can help give you more than a good guess on what your electric bill will be each month. You can also do some research on average costs to give you an idea of what to expect. For example, monthly cable bills cost an average of $100.
Stay Under Control
You have already checked your credit score, but don’t let a good score be an excuse to start spending recklessly while you’re buying a home. Lenders will be leery if they see you making other big purchases at the same time you are buying your home. At the same time, don’t close out all your old credit cards. This can hurt your debt to utilization ratio, which is a part of your credit score, and you want to keep this score as high as possible.
Negotiate Everything
If there’s something you find that you want from the seller during the home-buying process, don’t be afraid to ask. The worst they can do is say no, and negotiation is a common tactic as people buy homes. Your real estate agent will be doing the asking anyway, and you likely won’t see the seller after the sale is finalized. So, if you want that swingset to stay with the house or you want the owner to replace the broken window, ask. Don’t be afraid to get the inspections you want as well. This is your chance to find out everything you can about a home where you could be living for years.
Buying a home is an exciting time in your life. Take advantage of these finance tips to get yourself in the best shape possible to buy that home. It can be a long process, but the end result — relaxing and living in a brand-new home — is definitely worth the wait.
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