First Time Home Buyers and Credit: 6 Mistakes to Avoid
For seasoned investors and previous homeowners, they probably already know that one of the most crucial factors that affect the home purchase is the homebuyer’s credit. Having a strong credit can give the buyer an advantage when applying for a loan. It will determine whether or not your application will get approved and how much your interest rate will be. When planning to buy a home, it is a basic requirement to check your credit. But most first time home buyers tend to overlook this step and commit mistakes regarding this matter. To let you do things differently, here are 6 credit mistakes that first time home buyers should avoid: 1. Not reviewing your credit report earlier It is a common practice for home buyers to review their credit report. But some homebuyers fail to review their credit report early and end up not having enough time to fix the errors and concerns encountered. When you are seeing your credit report for the first time, some concerns that you may encounter may include wrong identification, wrong address information, or incorrectly reported accounts. These can have an impact on your credit score and can affect your mortgage application. Make sure to review your credit report early as these issues may take a while to be resolved. It is better to get everything resolved before you proceed with your loan application. 2. Not cleaning up your credit before applying for a loan As mentioned in the previous point, all issues concerning your credit must be resolved before you proceed with your loan application. This includes cleaning up your credit. Unless you can purchase a home in cash, you will definitely be applying for a loan and the lenders will probably be looking at your credit score. To have a good credit score, it is important to clear all debts, pay your bills on time. As soon as you think of buying your first home, whether it’s months or a few years away, the best thing that you can do aside from saving up is by making sure you maintain a good credit score. The earlier you start, the more time you have to fix your credit. You should aim for a higher credit score as it will give you a higher chance of getting approved for a mortgage with lower interest rates. 3. Not getting pre-approved before house hunting Once you have identified how much you can afford for your first home, it doesn’t necessarily mean that you are ready for house-hunting. Setting your budget wouldn’t be enough for you to be able to find your first home. It would be easier to find a home and provide a proper offer if you have a pre-approval. Getting pre-approved has a lot of advantages for buyers. For instance, sellers will be more likely to accept your offer as they will look at you as a serious buyer. Having a pre-approval is proof that you are capable of financing your property purchase. Hence, your credibility as a buyer will be an advantage when sellers assess the offers presented to them. 4. Accepting the first mortgage offer Another credit mistake that first time homebuyers tend to commit is not looking at multiple lenders. If your credit score is not as good as you expect it to be, it might be tempting to accept the very first mortgage offer that you get approved for. However, this first mortgage offer might turn out to have a higher interest rate. As a result, you will end up paying more money in the long run. Keep in mind that accepting the first offer isn’t always the best decision when it comes to your mortgage. Discuss with your real estate agent and identify what is the best strategy for you. If you do not have a very impressive credit score, evaluate your finances and assess how long you will be able to raise your credit score. If you think you can fix your credit score soon, giving yourself a few more months before you accept a mortgage might be a good strategy. This will give you time to improve what needs to be improved. In return, you’ll be able to save more money as you will get to receive mortgage offers with lower interest rates. 5. Ignoring first-time homebuyer programs When you see those negative online reviews and actively avoid the red flags, nope, you’re doing it wrong! Research to access previous reviews from other homebuyers to cross-check the credibility of your target first-time homebuyer programs. You can also consult with your real estate agent. This helps you check the authenticity of the listing, considering the previous experiences of other first-time home buyers and the information from your agent. More importantly, this enables you to check if there are other first time homebuyer programs that you can reconsider before finalizing the purchase. 6. Opening credit during the underwriting process While you are waiting for the closing of your property deal, you will definitely be excited about your move-in date. You have probably thought of the furniture that you will be purchasing for your home and how you will decorate your new home. This entails more expenses and you might have considered getting a new credit. However, you need to keep in mind that this isn’t a good idea. Your mortgage pre-approval is based on the current credit record and debt-to-income ratio by the time you applied. Hence, adding more credit can jeopardize your loan application and approval. After all, these six mistakes can make or break your investment. By avoiding these six mistakes, you get to save more money and make the most out of your first real estate purchase. To ensure that you’re committing to the right choice, do not hesitate to reach out to your real estate agent. We will always be more than willing to help you make the right choices for your first real estate investment. Rabecca Ranaldi As an Associate Broker at EXIT Realty Mountain View - I help home buyers and sellers along Colorado’s Front Range including Colorado Springs, Woodland Park, and Peyton. As your Local Resource, I am happy to help! Associate Broker for Exit Realty Mountain View 719-426-0949 cell
4 Things to Know Before You Move
MOVING! The very thought of it can send chills down our spine and can cause us to break out into a cold sweat. Experts say that any kind of “change” creates “stress”. Moving, (and especially if we are relocating to a new city or state), represents a huge change and naturally brings a great amount of stress along with it. This can be a double whammy, because stress can lead to a lack of energy and motivation. Many of us tend to procrastinate during stressful periods of our lives. This is one time, though, when we must rise above that. When preparing for a move we need to put the pedal to the metal and get a lot of things done. This checklist contains many suggestions that may seem like “no-brainers”. However, the very act of printing out these simple suggestions and reminders can become a significant security blanket as the dreaded time approaches. Moving and relocating calls for being proactive, grabbing the bull by the horns and actually completing certain chores well in advance of their deadlines. Hopefully this little article will help you to accomplish that. 1. Get rid of what you don’t need. Many of us are “pack rats”. One thing that we can accomplish immediately is going through all of our “stuff” and getting rid of what we don’t need anymore. Moving unwanted clothing and bric-a-bracs from one place of residence to another is a great waste of time and effort. It is surprising how much more in control we feel once we start narrowing down our “inventory” to what we actually need to keep. Getting rid of the unwanted items can be done by having a garage sale long before moving time and then donating the leftovers to the Salvation Army or other charitable groups. 2. Get all important papers and documents together and secure them. Since moving is hectic, to say the least, we need to be aware of the exact location of all of our important items. Things that we absolutely must not lose or misplace should certainly be hand carried, not put in a box for the movers: Address Books, Birth Certificates, Bank Statements, Checks, Credit Cards and Statements, Home Movies, Irreplaceable Memorabilia, Insurance Policies, Marriage Records, Medical and Dental Records, Military Records, Passports, Photos and Photo Albums, Resumes, School Records, Stock Certificates, Tax Returns, Telephone Numbers, Valuables, Vehicle Documents, Wills. 3. Prepare well in advance for living at your new location. There are many things that we can do at our new location well in advance of our move that will help smooth out the bumps and grinds of our relocation process when the actual event occurs: Open up new bank accounts. Open up a new Safe Deposit Box. Contact the new area utility companies and arrange for your new services. These can include Cable TV, gas, electric, oil, telephone, water and Internet access. Arrange for new medical providers. If you are moving to a new state, contact the DMV and get forms necessary to re-register your vehicles. Contact your insurance companies and find out if your car insurance, homeowner’s insurance, etc. can be transferred. If not, find an Insurance Broker in your new area and discuss your needs and requirements for new policies. Go to the post office and get a moving kit. Prepare change of address forms for all of your correspondents; credit card companies, other credit accounts, banks, insurance companies, current utility companies for final statements, magazines and other subscriptions, family, friends, and any other persons or businesses that you correspond with on a regular basis. 4. As the time approaches, have the important numbers handy. As moving day approaches and when the moving process actually begins, you don’t want to be hunting for phone numbers in wallets, purses, or address books. Have a nice new notebook or electronic notebook ready with all important phone numbers written clearly and legibly for both your old and new contacts: Banks, Doctors, Emergency contacts, Family members, Friends, Landlords or Real Estate Brokers, Movers, Pharmacies Schools, Storage Facilities, Utilities. With proper planning and preparation the moving process, though never fun, can at least be sane. If you need help or some contacts for services feel free to reach out to me. I got you!
When to Build vs Buy…
Everyone has fantasized at some point about his or her dream house. You may want closets big enough to live in; a bathroom that doubles as a spa; a kitchen in which you could produce programs for the Food Network but, as in most fantasies, there is usually some epic journey required to achieve the goal. And building your dream house follows that plot line all too closely. But isn’t it the dream that makes the quest worthwhile? Yes, if you can weather the storms and battles along the way. And the determination to keep moving forward is usually a function of a strong will and a big heart. It is likely that you have options when you begin the process of buying a home. There may be existing homes in the area that are affordable and that meet your needs. But there are always things about any property or house that don’t exactly meet with your approval. The basement may not be finished or the yard may be too small or the interior decor may have to be entirely redone. It is virtually impossible to buy an existing home without making compromises. Building new allows you to imagine, design and build the home that accommodates needs and amenities that are important to you within a budget of course. And that is one thing that must be considered. A new home will be more expensive, on a cost per foot basis, than an existing one. That is due to the cost of land, the price of building materials and labor expense. You might also find that taxes are high as a new area is developed and the municipal authorities factor in the required infrastructure for a growing population and the need for services like education, law enforcement and recreation. You may find yourself subsidizing some of these costs as an area develops. The ongoing costs associated with an existing house are more predictable. However, there will likely be more maintenance expense than for a new house and energy costs tend to be higher with older properties because newer homes are more energy efficient. Commuting costs may be an issue. Developers must go further and further out to find enough land to accommodate a new subdivision. That may mean higher costs for commuting to work and to access other businesses and venues that may be closer to the nearest major population centre. You should consider this from both a monetary perspective and to determine if you are comfortable with an additional investment of time. If your new house is built in a subdivision there may be ongoing fees required. In addition, there may be covenants that are designed to protect property values that may apply serious restrictions on your ability to enhance your home and/or your property down the road. A new home needs new landscaping. This may be included in the price of the home but there will likely be a limit to what is covered under the agreement. To landscape the property in a way that is truly satisfying may require an additional outlay. Beware of construction delays! Building contractors are notorious for setting deadlines they miss and making promises they can’t keep. Make sure you do some thorough research about the builder and his track record before you commit. Weather is always unpredictable and may have an effect but that should be factored in from the start. A new subdivision can be a hornet’s nest of building activity. If you move into your home early in the process be prepared for hammering, sawing, trucks, mud and general chaos for quite a while as the subdivision progresses. This is a lifestyle issue and is a temporary inconvenience. But some have found this level of activity disconcerting and disruptive especially when they are settling into their dream home and trying to savour the experience. If you build new be prepared to stay for a while. With new construction all around you it would be difficult to compete with the rest of the properties available for others who want to build a house from the ground up. You would have to make it worth their while and that usually means a compromise in price. All this being said (and trust me there is more that could be said) there is nothing quite as satisfying as showcasing the house to family and friends that you designed and built and that reflects your unique vision and personality. If you survive the journey, you will likely have turned your fantasy into reality. Call me or Message me to get started on building your dream home Today!
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