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DON’T DO THESE 5 THINGS IF YOU’VE APPLIED FOR A MORTGAGE
So, you’ve found your dream home. Congratulations! Now, here are a few things you shouldn’t do once you’ve applied for a mortgage.
FINANCIAL PITFALLS TO AVOID ONCE YOU’VE APPLIED FOR A MORTGAGE
After a long time shopping for a home, you’ve finally found the perfect one. It has everything you were looking for and then some, and you’ve applied for a mortgage. Now what?
For the most part, you wait. While you wait, however, there are a few things you shouldn’t do to ensure you remain in good financial standing while your loan is in underwriting. Here are 5 things you should never do once you’ve applied for a loan.
MAKE BIG PURCHASES ON CREDIT
Until you close on your home and you have keys in hand, you need to avoid making any big purchases on credit. This includes buying a new car, furnishings for your new home, jewelry, etc. As tempting as it is to buy things for your new home, resist it as any large purchase made on credit can alter your debt-to-income ratio and potentially disqualify you for the mortgage.
Your job history plays a big role in whether you qualify for a mortgage or not. Lenders like to see that you have a stable source of income and that you’ve had it for an extended period.
While you’re waiting to close on your new home, avoid changing jobs and how you get paid at your job. Also, avoid becoming self-employed during this time.
APPLY FOR NEW CREDIT
While you’re going through the loan process, it’s a good idea to not open any new lines of credit. The act of applying for a credit card can negatively impact your credit score, which can ultimately impact your eligibility for a mortgage.
On that same note, avoid closing any existing lines of credit as well. Remember, your credit history is a big part of the approval process, so your lender needs to see it all.
MAKE LARGE CASH DEPOSITS
If you think having a lot of money in your bank account looks good to lenders, think again. Lenders like to have proof of your savings, so avoid making large cash deposits into your account during this time.
If you must make a large deposit into your account, ask your loan officer about the best way to document it so it doesn’t look like you took out another loan to increase your savings.
CO-SIGN A LOAN
Co-signing a loan for someone else is a huge red flag to lenders because should the person you’re co-signing for not make their payments, you’ll be responsible for doing so yourself. Even if you promise you won’t ever have to make the payments, a lender may decline to approve you for a mortgage if you co-sign a loan for someone else during this time.
Finding the home of your dreams is exciting. What comes after that – not so much. The loan process can be frustrating and confusing, but as long as you avoid doing any of the things listed above during that time, you should find yourself moving into your new dream home very soon.
How To Pick a New Home You’ll Adore (With a Monthly Payment You Can Afford)
This is the really fun part, although it does come with its own unique challenges. Even if you love the entire process of house hunting, the options can be overwhelming. Ranch or Colonial? Suburb or city? Small apartment or palatial townhouse? Built-in 40-foot waterslide or stand-alone 40-foot waterslide? It’s hard not to feel like you’re drowning in the possibilities.
To help winnow the myriad options to find the perfect place for you, heed these tips—and happy searching!
Have a long chat with your agent
Here’s the simple truth: Only you will ultimately know which home is just right for you; however, a good agent will have a better handle on the market. Not only is your Realtor keeping a constant eye out for newly listed homes you might love, but he can also quickly go through your wish list and help you understand what is (and what isn’t) realistic.
So be sure to tell your agent not only what you’re looking for, but why you’re moving, too.
“Are [you] downsizing? Moving closer to work? Accommodating a growing family?” asks Nathan Dart, a Realtor in Rockville, MD. The reason it all matters: A savvy Realtor will point out things you might not have considered—such as the importance of a one-story home if you’re near retirement and planning to stick around for the long haul.
Don’t worry about timing
Patience is difficult. You want your new home right away. Waiting for something to fall into place can feel like endless purgatory. But that doesn’t mean you should rush the hunt.
“I’ve had clients who spend years in house-hunting mode,” says Gretchen Koitz, a Realtor with The Koitz Group in Bethesda, MD. Not that this is necessarily a good thing either.
Certainly there’s nothing wrong with finding a great home right away. But it’s best not to prioritize timing above all else unless it’s absolutely necessary (during a relocation, for example). Koitz says the idea of purchasing one of the first homes they see can be “very unsettling” for buyers. “They somehow think they’re not doing their due diligence if they don’t look for a predetermined amount of time,” she says. “Since we never know what’s coming on the market, we also never know when ‘your’ house will show up.”
See beyond the decor
Most people are terrible decorators, and you’re allowed to be turned off by an ugly home. But you shouldn’t let stylistic choices affect your judgment of what a home could be. As Koitz puts it, “‘I hate the red paint in the dining room’ is not a valid concern.” Look beyond those garish drapes to the bones beneath. Is the picture window hidden behind them stunning? Is the hardwood floor good quality, despite the stained rugs layered on top? Think of the long term. Remember, the current owners’ raggedy stuff will leave with them.
Bring a camera
When you’re shopping for homes, remembering which one had the dark parquet floor and which one had the wall-to-wall shag can get more confusing than you might think. After a dozen showings, recalling exactly what bothered you so much about the bathroom of one home (perhaps it was the toilet facing the shower?) requires an impeccable memory and keen attention to detail. So skip the mental heavy lifting by snapping pics of every room you see. If you want to go above and beyond, consider categorizing them on a computer by house and room.
Tune in to how you feel
Not to get too woo-woo spiritual about it, but house hunting isn’t just about what you see. It’s also about how you feel.
“A big part of home buying is pure emotion,” says Koitz. And this swirl of feelings may surprise you, drawing you toward homes you never thought you’d love and away from ones that hit every box on your checklist.
“Agents have a secret saying, which is that ‘Buyers are liars,’ says Koitz. “We don’t mean that buyers really mean to lie, but that what they think they want in a home often goes out the window when emotion kicks in.”
Don’t forget your must-have list, but don’t feel bad about skipping something you thought you wanted. A wonderful house without a his-and-her bathroom is still a wonderful house—you just might have to shuffle your expectations.
“It’s important for buyers to keep in mind that there is no such thing as the perfect house,” Dart says. “At the end of the day, you’ll find some place that hits the high notes and that includes the things that were most important to you.”
Found a home that feels just right? Next comes the essential art of making an offer that will be accepted.
How to Improve Your Credit Score to Score a Mortgage for Your First Home
Wondering how to improve your credit score? Sure, it’s easy to fall in love with the idea of buying a home. You’ve got it all planned out: a five-bedroom home in your favorite neighborhood with a manicured lawn and—why not?—a nice pool.
But if you’re going to get a mortgage (and let’s face it, most homebuyers do), you’ll likely need to improve your credit score, also called a FICO score—a simplified calculation of your history of paying back debts and making regular payments on loans. If you’re borrowing money to buy a home, lenders want to know you’ll pay them back in a timely manner, and a credit score is an easy estimate of those odds.
Here’s your crash course on this all-important little number, and how to whip it into the best home-buying shape possible.
Pull your credit report
There are three major U.S. credit bureaus (Experian, Equifax, and TransUnion), and each releases its own credit scores and reports (a more detailed history that’s used to determine your score). Their scores should be roughly equivalent, although they do pull from different sources. For example, Experian considers on-time rent payments while TransUnion has detailed information about previous employers.
To access these scores and reports, financial planner Bob Forrest of Mutual of Omaha recommends using AnnualCreditReport.com, where you can get a free copy of your report every 12 months from each credit-reporting company. It doesn’t include your credit score, though—you’ll have to go to each company for that, and pay a small fee.
Or check with your credit card company: Some, including Discover and Capital One, offer free access to scores and reports, says Michael Chadwick, owner of Chadwick Financial Advisors in Unionville, CT. Once you’ve got your report, thoroughly review it page by page, particularly the “adverse accounts” section that details late payments and other slip-ups.
Assess where you stand
It’s simple: The better your credit history, the higher your score—and the better your opportunities for a home loan. The Federal Housing Administration requires a minimum credit score of 580 to permit a 3.5% down payment, and major lenders often require at least 620, if not more. So what can you do if your credit report is in less than shipshape? Don’t panic, there are ways to clean it up.
How to improve your credit score with error disputes
A 2013 Federal Trade Commission study found that 5% of credit reports contain errors that can erroneously ding your score. So if you spot any, start by sending a dispute letter to the bureau, providing as much documentation as possible, per FTC guidelines. You’ll also need to contact the organization that provided the bad intel, such as a bank or medical provider, and ask it to update the info with the bureau. This may take a while, and you may need documentation to make your case. But once the bad info is removed, you should see a bump in your score.
Erase one-time mistakes
So you’ve made a late payment or two—who hasn’t? Call the company that registered the late payment and ask that it be removed from your record. “If you had an oopsy and missed just a payment or two, most companies will indeed tell their reporting division to remove this from your credit report,” says Forrest. Granted, this won’t work if you have a history of late payments, but for accidents and small errors, it’s an easy way to improve your credit score.
Increase your limits
One no-brainer way to increase your credit score is to simply pay off your debt. Not an option right now? Here’s a cool loophole: Ask your credit card companies to increase your credit limit instead. This improves your debt-to-credit ratio, which compares how much you owe to how much you can borrow.
“Having $1,000 of credit card debt is bad if you have a limit of $1,500. It isn’t nearly as bad if your limit is $5,000,” Forrest says. The simple math: Although you owe the same amount, you’re using a much smaller percentage of your available credit, which shines well on your borrowing practices.
Pay on time
If you’re often late with payments, now’s the time to change. You have the power to improve your credit score yourself. Commit to always paying your bills on time; consider signing up for automatic payments so it’s guaranteed to get done.
Give yourself time
Unfortunately, negative items (such as those habitually late or nonexistent payments) can stay on your report for up to seven years. The good news? Changing your habits makes a big difference in the “payment history” segment of your report, which accounts for 35% of your score. That’s why it’s essential to start early so that you’re sitting pretty once you’re shopping for homes and find one that makes you swoon.
Once you’ve set your credit on a better path, it’s time to tackle the next major hurdle: saving for a down payment.
The Home Appraisal Process: How It Can Impact Your Mortgage Payment
The home appraisal process is just a formality when buying real estate, right? You’ve found the house you love and put in a good offer, and it was accepted! It’s time to break out the Dom Pérignon White Gold? Sorry, not yet.
If you’ve applied for a mortgage, your home-to-be still has to undergo a comprehensive appraisal of its worth—and an unfavorable home appraisal can kill a real estate deal. Yikes! It can be a nerve-racking ordeal, but it’s actually good for you. Allow us to demystify the process.
Appraisals estimate a home’s value with fresh eyes
Just because you and the sellers have agreed on a price doesn’t mean it’s a done deal—your lender needs to be on board, too. After all, it’s the lender’s real estate investment as well. To get a mortgage, you’ll need a home appraisal because the home serves as collateral for your lender. If for some reason you end up unable to make your mortgage payments, the lender will have to foreclose on your home, then sell the property to recoup its costs. So your mortgage lender will have to know the value of your home before handing over that large chunk of change.
While the home appraisal process is somewhat similar to getting comps—as you did to determine a fair price—the appraiser delves in deeper to determine the home’s exact value.
An appraiser will investigate the condition, the square footage, location, and any additions or renovations. From there, he or she will appraise the home and determine its value.
An appraiser is trained to be unbiased, says Adam Wiener, founder of Aladdin Appraisal in Auburndale, MA.
“I don’t care what anybody wants the home to be worth,” he says. “As an appraiser, I’ll give you the answer. You may not like it, but it’s the answer.”
Off-site, the appraiser may also evaluate the current real estate market in the neighborhood to help determine the value of the property.
Usually, the lender or financing organization will hire the appraiser. Because it’s in the best interest of the lender to get a good home appraisal, the lender will have a list of reputable pros to appraise the home.
Whoever takes out the mortgage pays for the home appraisal, unless the contract specifies otherwise. Then the buyer pays the fee in the closing costs. If a seller is motivated, he may pay for the home appraisal himself to back his asking price, which benefits the buyer by reducing closing costs.
You’ll get a copy of the home appraisal, too
An appraiser sets out to determine if the home is actually worth what you’re planning to pay. You might be surprised by how little time that takes; the appraiser could be in and out of a home in 30 minutes, and that’s not a reason to panic.
An appraiser doesn’t have the same job as a home inspector, who examines every little detail. While they’ll pay particular attention to problems with the foundation and roof, the home appraisal process includes noting the quality and condition of the appliances, plumbing, flooring, and electrical system. With data in hand, they make their final assessment and give their report to the lender. The mortgage company is then required by law to give a copy of the appraisal to you.
Appraisers work for your lender—not you
As the buyer, you’ll be paying for the home appraisal. In most cases, the fee is wrapped into your closing costs and will set you back $300 to $400. However, just because you pay doesn’t mean you’re the client.
“My client is the lender, not the buyer,” Wiener says. This ensures that appraisers remain ethical—in fact, it’s a crime to coerce or put any pressure on an appraiser to hit a certain value. Appraisers must remain independent.
“Anything less, and public trust in the appraisal is lost,” says Wiener.
They protect buyers from a bad deal
In essence, the home appraisal process is meant to protect you (and the lender) from a bad purchase. For instance: If the appraisal comes in higher than your asking price, it’s generally fine. Sure, the sellers could decide they want more money and would rather put their home back on the market; but in most cases, the deal will go through as expected.
If your appraisal comes in lower than what you offered, this is where things get tricky: Your lender won’t pony up more money than the appraised price. So if you and the sellers agree on $125,000 but the appraisal comes in at $105,000, it creates a $20,000 shortfall. What’s a buyer to do? Read on.
A curveball appraisal isn’t necessarily the end
If the appraisal process happens, your appraisal comes in low, and your contract with the seller was contingent on an appraisal, you could walk away and have your earnest money returned.
If you prefer to buy the home anyway (or waived your appraisal contingency), there are some other paths you can pursue:
- Come up with the cash to cover the difference between the appraisal and offer price.
- Ask the seller to cover the difference.
- Challenge the appraisal, and pay for a second opinion.
Keep in mind, though, that your new report could come out identical. Also keep in mind that if you do choose to walk away, that’s actually good news, although it may not seem like it at the time. Why? Because the appraisal kept you from paying too much for your home.
Once your appraisal is done, you’re still not ready to close without another nerve-racking step called a home inspection.
Take the Plunge: The 4 Best Reasons to Buy a Home This Year
he housing landscape of the past several years hasn’t exactly been friendly to buyers: the bidding wars, the eye-popping prices, the houses that sold before a “For Sale” sign even went up. It’s enough to make any of us put our search on hold until we have a fighting chance at landing a home—without draining our bank accounts.
If you’ve been sitting on the sidelines, we’ve got good news and we’ve got bad news: Things are finally slowing down. But they might not slow down fast enough for your liking.
Don’t despair, though—this year still stands to look better than last for aspiring home buyers.
“If your resolution is to buy a home in 2019, you’ll have some challenges to contend with, but also some opportunities,” says Danielle Hale, realtor.com‘s chief economist.
The devil’s in the details, though, and there are quite a few factors that could dictate whether this is your year to buy. Here are the four biggest reasons to take the plunge now.
1. There will be more available homes—or at least, not fewer
Tight home inventory has sidelined would-be buyers for several years now. Even if you could afford a home, too few of them were hitting the market to keep up with demand. Or, when they did, there was a good chance they were snapped up before you could even call your real estate agent.
House hunting felt especially bleak last winter, when nationwide inventory hit its lowest level in recorded history. By the end of 2018, though, things finally started looking up, and in 2019, experts predict more opportunities—and less frustration—for buyers.
But there’s a catch: Not everyone will be able to afford those opportunities. That’s because the markets seeing the most increases in available homes tend to be more expensive, Hale says.
“For buyers, there is going to be more inventory. So that’s a bright spot,” she says. “The downside of that bright spot is it might not be in their price range.”
If you don’t have big bucks, though, all is not lost. The news is still good—just tempered. The supply of affordable homes for sale (under $300,000, which is about the median home price right now) might not be growing dramatically just yet, but it’s certainly not decreasing anymore.
2. Skyrocketing prices will slow their roll
While inventory went down, down, down over the past few years, home prices did the opposite. Will we still see staggering dollar amounts throughout 2019?
It’s another mixed bag here: Expect home prices to continue to rise (blah), but at a slower pace than they have been (yay). Hale predicts a 2.2% increase in home prices this year—compared with a nearly 5% increase last year.
That’s not nothin’. And if you can get in the market before those moderate increases, all the better.
“We do still anticipate rising home prices, particularly for below-median-priced homes, so buyers in that price range may have some incentive to buy sooner rather than later,” Hale says.
And there’s a silver lining to those climbing home prices, too—again, for some of you.
“As rising costs raise the bar to homeownership, some would-be buyers will be knocked out of the market, so
3. Mortgage rates are lower than expected
There was a lot of discouraging talk at the end of 2018 about increasing rates—and there was good reason to be nervous. Rates on a 30-year fixed-rate mortgage, the most popular home loan, were approaching 5%—and expected to trend upward throughout 2019.
But that hasn’t happened.
In fact, rates have been falling—perplexing the pros but creating a prime opportunity for home shoppers. Rates did tick up slightly last week—for the first time in 2019—to 4.46%. But that’s still historically low.
“That’s definitely a huge opportunity for buyers because it drastically improves affordability,” Hale says. “And I think that if these low rates persist for a little while, then we’ll actually see stronger sales than we originally forecast.”
“Lower mortgage rates will get buyers off the sidelines,” adds Ali Wolf, director of economic research at Meyers Research. “Consumers should take advantage of the returned purchasing power, and in fact, we’re already seeing early 2019 data that suggest they are.”
But don’t get complacent, Hale warns: “I do think that the long-term direction of mortgage rates is going to be back up. We’ve still got a strong economy.”
4. Rents are rising—and won’t be falling anytime soon
Buying a home is a scary-expensive endeavor in the best of circumstances, and when prices are climbing, it can be downright soul-sucking.
But bear this in mind: Rents are rising, too. In fact, they very rarelydecline, Hale says. And while buying a home is generally going to cost you more in the short term than renting, you have to look at the bigger picture. Buying means you’re building equity—and not forking over your hard-earned dollars to a landlord.
“The challenge will be finding a home that fits needs, some wants, and still stays within the monthly budget,” Hale says.
If you can afford to buy now, you’ll thank yourself in the long run—and whenever your friends get their annual rent increases. Rachel Stults is a deputy editor at realtor.com and co-host of the realtor.com podcast “House Party.” She covers all things real estate, including buying, selling, home decor, renting, moving, and more. Contact her at email@example.com. Follow @rachelstults
How Much House Can You Afford? Down Payment and Mortgage Rates Explained
How much house can you afford? Knowing you want to buy a home is one thing; knowing how much of a mortgage payment you can handle is quite another. Too often, dreams and reality collide: You’re yearning for a four-bedroom Colonial, but given your income and debt owed to credit cards and beyond, the best monthly loan payment you can manage is for a two-bedroom bungalow in a sketchy party of town.
So how do you pinpoint a house where the monthly mortgage payment is financially within your reach, and one that won’t drive you deep into debt? Allow us to help you paint your payment profile picture and find that magic number.
Why your mortgage payment depends on your income
Getting a ballpark estimate of how much house you can afford starts with looking at your income, or how much money you’re pulling in.
“The general rule of thumb is that you can purchase a home that costs two or three times your annual income,” says Harrine Freeman, a financial expert and the owner of H.E. Freeman Enterprises.
So if you’re earning $80,000 per year (and you have a reasonable amount of job security and don’t expect wild fluctuations in your income anytime soon), you can afford a house up to three times that, or $240,000.
That said, income isn’t everything, and this is just a ballpark figure to get you started.
“Tripling your income is only an estimate and does not account for your monthly bills,” says Freeman. So let’s dive into more specifics on what makes your payment pass muster.
Why your mortgage payment depends on your income and debt
Your income is only half the picture of what determines the monthly mortgage payment you can afford. The other half is your debt—meaning the debt you owe to credit cards, college loans, and other credit sources. Even if your income is high, having high credit debt means you have less money to put toward a monthly mortgage.
One way to factor your income and credit debt into how much mortgage you can afford is to follow the 28/36 rule, a simple but effective ratio for mortgage affordability.
The “28″ refers to your monthly housing payment—things such as mortgage, home insurance, and property taxes—which shouldn’t be more than 28% of your gross monthly income (ideally this payment should be less). This payment is easy to calculate, because all you need to do is multiply. For example, if your gross (meaning before taxes are taken out) monthly income is $6,000, you would multiply that by 28% (or 0.28), which equals $1,680—this is the maximum amount of your monthly housing payment.
The “36″ refers to your debt-to-income ratio. This ratio compares your debt, or how much money you owe (to credit cards, colleges, car loans, and—hopefully soon—a home loan) to your income. This ratio should be “no more than 36%,” says Freeman; ideally, this ratio should be much lower.
Think about this ratio in terms of your monthly expenses: If you have a monthly income of $6,000 but also spend $500 paying off credit cards or other debt, you would divide $500 by $6,000 to get a debt-to-income ratio of 8.3%. This ratio is great, but adding $1,680 in monthly mortgage payments would push up your debt load to $2,180 and your debt-to-income ratio to 36%. This ratio is exactly the maximum experts say you can afford. Going past this threshold is a risky move. Ignore this ratio, and you could end up with a house that, over time, could drive you even deeper into debt.
How a down payment fits into the picture
Last but not least, the amount you have for a down payment matters, too. Ideally, to get the best mortgage rates and terms, you’ll want a down payment amounting to 20% of the price of the house. But if you don’t have that much, rest assured you can put down less. FHA loans, for instance, need a down payment of only 3.5%.
Once you know both the down payment you plan to contribute as well as your monthly income and debt, you can easily work out the maximum monthly mortgage payment you can afford—and by extension, the priciest house you should buy.
According to realtor.com®’s Home Affordability Calculator, if you earn $6,000 monthly, pay $500 monthly in debts (pre-house), and can make a down payment of $40,000, if you get a 30-year fixed mortgage at 4% interest you can afford a house worth $277,800. Plug in your own numbers and see what happens!
How mortgage pre-approval can estimate your mortgage payment, too
Another easy way to get a sense of how much you can comfortably pay in monthly mortgage payments is to approach a mortgage lender and apply for mortgage pre-approval. That’s where the lender will take a look at your income, debt, credit score, credit report, and other factors of your financial past to determine how much money it’s willing to loan you to buy a home.
Note: If you’re not sure what your credit score is or why it matters, here’s a quick crash course: A credit score is your track record paying off past debt you’ve had on credit cards or college loans. The better your credit score, the better your odds of landing a great mortgage. (You can check your credit score for free at CreditKarma.com.) If your payment to debt sources has had some rough patches via late or missing payments, this could stand against you. The good news? If you take care of past debt and make your monthly payments on time, you can improve your credit score over time.
Mortgage pre-approval doesn’t just tell you exactly how big your monthly mortgage payment can be. As a bonus, pre-approval also makes you a more attractive buyer to home sellers, since they know you have financing to back up your offer.
Beyond your monthly mortgage payment: What else do you have to pay?
In addition to your down payment and monthly mortgage payments, you’ll want to budget for some other costs. The big one is closing costs, which are fees related to processing your loan that can range from 2% to 7% of your home’s price. Closing costs aren’t paid monthly; rather they are due at closing, when you get your keys. So make sure to set aside enough money to cover this sizable expense!
The other big ongoing expense to factor into your monthly budget is property taxes. Property taxes are often folded into the monthly payments you’ll find in a mortgage calculator, but they’re worth examining as a distinct factor since they vary greatly by area. So, you’ll want to check property taxes carefully. You can typically find the exact amount (or an estimate) of the property taxes you’ll pay on real estate listings, or by entering your address into an online home value estimator. (Here’s more on how to calculate property taxes.)
One final housing expense to keep in mind is homeowners insurance. This is also factored into payment estimates made by realtor.com’s mortgage calculator. One ballpark payment to keep in mind is that the average annual premium costs just shy of $1,000. This payment will vary by area and home, too. You can often break up this payment into small monthly installments so you won’t feel the pinch quite so much.
Add it all together = How much house you can afford
Once you’ve determined how much you can afford as a monthly mortgage payment, you can confidently embark on your house hunt!
Having a certain mortgage payment ceiling in mind, based on concrete numbers like your monthly income and debt, means you won’t end up busting your budget. You can choose a house that fits comfortably in your payment profile, so you know you can handle the monthly bills with ease.
If you find your monthly income and mortgage budget aren’t enough to snag the type of home you want, you’ll have to start weighing what you absolutely must have in your home—and what you’re willing to sacrifice if necessary.
Use the “pick 2″ rule: payment, quality, location. Typically you can prioritize two of those categories, but not all three. Your best bet is to stick to an amazing neighborhood for an amazingly low monthly loan payment, and know that your home might not have that pool, wine cellar, or other amenities you’d hoped for.
These trade-offs are just the reality of scrounging together enough of a payment to manage a mortgage and a house without getting sucked deep into debt—so don’t be disheartened.
If your monthly payments are falling short of your dream house, try widening your search to different neighborhoods or knocking a few items off your must-have list until you find the location and amenities that best fit your budget. Weigh what really matters for your dream home, then start performing preliminary searches online using sites such as realtor.com. And try to stay optimistic!
With enough searching and some luck, you can find a dream house that not only has all the features you want, but also meets your payment profile—from your income to debt to credit score and more.
How to Save Money for a Down Payment and Closing Costs on a New House
When you’re wondering how to save money for a house, it can start to feel like you’ll never scrape together enough for a down payment.
Yeah, you already know that Rome wasn’t built in a day. Well, the same holds true for building a down payment. It takes time!
How to save money for a house
Still, as long as you grease the gears early (like now), you’ll barely notice you’re saving until—boom!—one day in the foreseeable future you’ll be sitting on a pile of money that could pave the way to homeownership. Sound good? Good. Here’s how to get started.
Trim those quiet, unnecessary expenses
OK, let’s shift those preconceived notions. Contrary to popular belief, the answer to how to save money for a house isn’t mostly about grueling sacrifice—e.g., holing up in your apartment under a bare light bulb, eating ramen, and piggybacking off your neighbors’ Wi-Fi.
“It’s about a lifestyle change,” says Travis Sickle, a financial adviser with Sickle Hunter Financial Advisors in Tampa, FL. A more sustainable strategy, he says, is to pinpoint your silent money siphons that you barely notice. Odds are you could try some of the following cost-cutting measures without feeling the pinch:
- Replace your $250 monthly cable service with a $10 Netflix standard streaming account, and you’ll save $2,880 per year.
- Cut that languishing gym membership—at $50 per month, you’d save $600 a year. Go running instead!
- Packing lunch will save you about $60 a month—or $720 a year.
- Bike to work. For a 10-mile commute, biking can save you around $5 a day, according to Kiplinger—or $1,250 a year.
- Start a coin jar. Saving all your loose change can have a big impact—up to $700, according to financial blogger J.D. Roth.
- Turning down your thermostat just 3 degrees could shave almost 10% off your electrical bill, netting you $20 a month on a $200 bill, or $240 a year.
- Curb those dinners and drinks out at restaurants, which can quickly add up. If you typically shell out $40 three times a week, reduce that to one evening a week, and you’ll save $80—or $4,160 per year. (Bonus: It’ll make those times you do indulge more special!)
And if you and your significant other team up and try all of the above, that would amount to $10,550 per person, or $21,100 in one year’s time. Just remember that when you’re thinking of ordering a second glass of artisanal craft beer.
Open a dedicated account
If you don’t have a savings account, now’s the time to open one. A checking account is great for daily expenses, but when it comes to saving money—well, they don’t call them savings accounts for nothing. You’ll earn interest on your balance, plus there’s a lot to be said for the mental benefit of having a specific place to stash your down payment. While interest rates haven’t been very impressive in recent years (though, you’ll be grateful for that when it comes time to get a mortgage), it’s still great to have a dedicated account where you can see how you’re progressing toward your goal.
Financial planner Bob Forrest of Mutual of Omaha points out that CDs and money market accounts offer higher gains than savings. You’ll need a larger minimum balance than for a regular savings account, but your goal is to make it grow, not shrink, right? If you’re using a CD, just make sure you don’t withdraw the money before the time is up or else you’ll face some stiff penalties.
Automate your savings
If you’re struggling to put enough money away because of the constant temptations to blow your paycheck, consider automating the process. Ask your employer if you can have your paycheck deposited into multiple accounts—if so, instruct it to send a certain percentage of your salary directly into your savings account. Or go through your bank, setting up automatic withdrawals from your checking to savings account that will force you to keep spending in check.
Tap into your IRA
Another great place to stash your cash? A traditional or Roth IRA, says Forrest. In addition to being a tax-friendly retirement vehicle, it allows you to withdraw up to $10,000 for a home. While withdrawals from a traditional IRA will be taxed, a Roth IRA you’ve owned for more than five years won’t be taxed at all, as long as you’re a first-time home buyer. Just be careful with this method, though, as you will be denting your retirement funds. But combined with other savings, it can quickly add some heft to your growing nest egg.
Check out down payment assistance programs
Depending on the city and state you live in, you may be eligible for down payment assistance programs, which provide money to help people buy a home. Most offer up to $15,000, typically in the form of a grant or low-interest loan. Most require your income to be below the area median. But even if you make more, do your research—there are programs that provide funds for higher-income households.
If saving up for a down payment is a challenge, it may surprise you to know that you don’t always need to save 20% for a down payment. With certain kinds of loans, you can get away with a down payment as low as 3.5% (for FHA loans) or even 0% (USDA loans). Here’s more on how to buy a home without 20% down.
Once your down payment is on a roll, it’s time to start looking for a home—and to do that, you’ll need to determine exactly how much house you can afford.
1. Your salary qualifies you for a mortgage
When determining if you can buy a house, your salary is one of the first figures you should take into account. But don’t trick yourself into thinking that you can’t afford a house simply because you don’t make a six-figure salary! Use this quick equation from Lauren Anastasio, a certified financial planner with SoFi in San Francisco, to determine a realistic mortgage amount:
Multiply your annual income by 2.5, and then add your down payment amount to that figure. Your total amount is the max mortgage you should shoot for.
2. You can afford to put down at least 3%
Most first-time home buyers are intimidated by the idea of having to put down a large chunk of change. However, the traditional 20% down isn’t your only option.
Other paths to mortgages include conventional loans, which require a minimum of 3% down, and Federal Housing Administration (FHA) loans, which can go as low as 3.5% down. And if you’re a veteran, you can qualify for a VA loan with no down payment. So take a look at your savings account and browse the home listings in your area. You might just find that your years of saving have actually put you in a position to qualify for a mortgage.
3. You have a little bit of debt
Another common misconception among first-time home buyers is that future homeowners must be debt-free in order to get approved for a mortgage loan. But don’t worry—you can still buy a home even if you’re still paying off your student loans.
“Lenders like to see a little debt. By paying down a car loan on time, you’re showing the bank that you are a responsible borrower,” says Andrew Helling, editor at REthority.com.
4. Your credit score is over 580
Another number lenders look at to determine your creditworthiness is your credit score. A perfect credit score is 850, and any score over 740 is considered to be great, but you don’t need to fall in this range to be approved for a loan.
If your credit score falls below 700, lenders will start to question whether you’re a risky investment as a potential borrower, and getting a mortgage will be more challenging. But, if your score is above 580, there’s still hope in the form of an FHA loan or another type of conventional loan. The FHA requires a minimum 580 credit score (and other requirements) to qualify. Having a poor credit score means you’ll probably be required to pay PMI, but the benefits of owning a home could far outweigh the negatives.
5. A starter home (if not a forever home) is within reach
Some first-time home buyers make the false assumption that the first home they invest in needs to be their forever home. But don’t let that idea deter you from purchasing a modest starter home, even if you soon outgrow your new digs.
What you shouldn’t do is buy a house that you can’t yet fill, hoping that your lifestyle later catches up. That can be a recipe for disaster.
For more info, go to Realtor.com
Real Estate Agent Tips on How Buyers Can Make an Offer on a New House
We’ll get right down to it: Shopping for a home is fun. But once you find “The One,” things start to get real—real fast. Think of making an offer on a home as setting the roller coaster in motion: You might have sharp drops in emotion and slow, trudging climbs to success, but the ride won’t end until the car slows down and the safety bar is lifted. (OK, this metaphor is now officially over.)
You need to learn how to make the right offer, the one that will end with your receiving the keys to your new house. So check out some of these agent-approved negotiation tactics to make the process a whole lot less bumpy.
Pick the right price
Just because the home is listed at $300,000, it doesn’t mean it’s actually worth that much. It all depends on the market. If you’re buying somewhere hot—especially places with low inventories—offering substantially below asking price is “probably wasting your time,” says Mindy Jensen, a Realtor® with Equity Colorado. But if the place has been sitting unsold for a few months, even the sellers probably don’t expect full price. Your best reality gauge are comps, or what similarly sized homes nearby have sold for recently.
Work with your real estate agent to determine a fair asking price; he or she will have the best read on pricing and marketplace dynamics, and can walk through the comps with you. Your agent can help you determine what a fair discount would be without offending the seller. While specific numbers will depend on your market, experts estimate that it’s unrealistic to go below 5% of the list price unless it’s been sitting on the market for months. Which leads us to…
Lowball with care
“Longtime owners usually have tons of pride in their home, and want the new owners to love it like they do,” says Jodie Burns, a Realtor with McEnearney Associates. “Buyers who lowball run a risk of angering the seller and losing the house. Ideally, you’re looking for a closing where both sides feel like they got a fair deal.”
So don’t lowball unless both you and your Realtor agree that it’s the best strategy for the occasion. Think about the big picture: “If a couple of thousand dollars is going to keep them out of a home they love, I remind buyers how little that amount translates into a monthly payment,” Burns says.
Write a letter
If the market’s tight and you’ve decided that you must have that stunning Colonial, you can boost your chances by writing a personal letter. Maybe you’ve heard this before? It helps, really.
“Top dollar will typically win the bid, but the sellers get to choose which offer they like best,” says Jensen. “Including a letter can sway them toward you, or at least give you the opportunity to match the highest offer.”
Jensen recommends scouting the house to figure out what’s important to the sellers and mentioning it in your letter. For example, a dog shed in the backyard means they’re probably canine lovers—and more likely to respond to your excitement over little Humbert’s potential new backyard. If they’re mountain bikers, they’ll love that you’re excited about the nearby trails, too. And, of course, parents who raised their (now grown-up) kiddos in this home will appreciate your intentions to do the same.
Along with the price, you’ll also want to factor contingencies into your contract: For example, do you need to sell your own home first, requiring a selling contingency? Work with your Realtor to decide what you’ll ask for off the bat—and consider dropping some requests if the market is hot.
As Jensen explains, “Your chances are best if you ask for the fewest things.” Don’t put yourself at risk to get the home you love, though. Some people might advocate dropping the inspection clause to sweeten your offer, but that can be dangerous, especially in older homes.
Keep your emotions in check
Yes, the search seems to have dragged on forever; yes, this home has everything you need. But keep your wits about you.
“Don’t fall in love,” Jensen says. “Falling in head over heels with a home can make you do ridiculous things, like overpay.”
Plus sometimes, even an “excellent offer may not be accepted,” says Vici Boguess, a Realtor with the Burke Boguess Zimmerman Group in Alexandria, VA. Don’t assume a rejection is an insult—the sellers might just dislike some of your contingencies or are holding out for a better offer. So, don’t assume it’s over until it’s over.
But if your offer is accepted, you will need to move onto the next step: landing a home loan.
How to Get a Home Loan: Tips on Down Payments, PMI, and Other Mortgage Info
Unless you’re one of the few lucky home buyers larded with old money, an inheritance from Great Aunt Sue, or a Zuckerberg-style salary, you’re going to need a mortgage. In the entire tortuous home buying process, it’s perhaps the most intimidating and seemingly daunting step: convincing a bank to hand you hundreds of thousands of dollars. How do you pull it off? And what strings are attached?
Here are the questions to ask yourself—and the answers you need—to help you ace this all-important step.
Should you work with a bank or a broker?
The majority of home buyers get their mortgage directly from a bank—often the institution where they’re stashing their primary savings. But that’s hardly your only, or best, option. Shopping around with different lenders may land you a better deal (typically in the form of a lower interest rate).
Or you can choose to hire a pro—a mortgage broker.
Brokers work directly with lenders to negotiate terms and determine the best loans for you—not the generic “you,” but you specifically, taking into account your needs, income, savings, and any special situations that might apply. For instance, first-time buyers might have just landed a better job or gotten a raise, giving you more buying power that isn’t reflected in the last two years of your tax documents. The right broker will be able to find loans that take only the past year’s returns into account.
The downside? Brokers do charge a fee, typically about 1% to 2% of the cost of your loan. While many receive this fee from the lender, they might also charge you, too. Still, if your financial situation is complex or you lack the time to do your own research, paying a broker could be money well spent.
How long will you live there?
For most people, the choice comes down to the two main types of loans: fixed-rate and adjustable rate mortgages, or ARMs. True to their name, fixed-rate mortgages offer home buyers an interest rate that remains the same for the life of the loan. ARMs have an interest rate that is fixed for an initial period (say, five years), then adjusts at regular intervals (typically one year) to reflect market indexes—which means that your payments will fluctuate, too.
If you prefer predictable payments and/or are planning to stay in your home for longer than a decade, a fixed-rate mortgage may be better, says Shikma Rubin, a mortgage consultant at Tidewater Home Funding in Chesapeake, VA. “This is especially true in today’s market, when interest rates are low. Then, your interest rate remains stable, regardless of market conditions.”
Yet there are times it makes more sense to get an ARM. For one, the starting interest rate for an ARM is often at least a percentage point lower than a fixed-rate mortgage, which can add up to substantial savings. And even though it may start vacillating at some point, that can be as far as 10 years down the line. Combine that with the fact that in a study from 2013, the typical buyer of a single-family home was predicted to stay in it for 13 years. So if you’re expecting your residency to fall on the shorter end of the spectrum, an ARM might make total sense.
What monthly payments can you afford?
Most mortgages offer two loan periods: 15 and 30 years. A 15-year loan offers a lower interest rate but higher monthly payments, since you’re paying it off in half the time. Conversely, a 30-year loan offers lower monthly payments, but you’ll pay more interest over those 30 years.
So which one is right for you? That depends on what you can afford. According to realtor.com®’s mortgage calculator, if you get a 30-year fixed-rate loan on a $200,000 home, your monthly mortgage payments would amount to about $1,385 per month. A 15-year loan for that same house would cost you $1,909. This is higher, but you’ll pay only $66,288 in interest, whereas over 30 years, you’ll pay $143,739. So it’s up to you: pay more now, or pay more later?
Do you expect your financial situation to change?
If you’re expecting major upcoming changes in your financial situation—good or bad—make sure to consider them before deciding on a loan. For instance, a major increase in your income might mean an ARM is the best product for you, providing low payments for now and more rapid repayment after a promotion. Anticipating a lump sum payment soon? Same thing: An ARM lets you pay less now and aggressively attack your principal balance later. But conversely, if you’re concerned about your job stability, “by all means, get a fixed rate,” says Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage.” As always, discuss your plans with your financial adviser or mortgage broker.
Should you lock in your rate?
A lock allows you to lock in a specific rate for a specified length of time before closing. This protects you if market rates go higher.
A float-down is an extra feature that can be added to a lock. It allows you the flexibility to get an even lower rate if rates happen to retreat after a lock is set.
These features require a fee, but depending on the volatility of the market and how critical it is for you to keep down your monthly mortgage payment, that cash could be a worthwhile investment.
Can you negotiate anything?
You may not have much luck negotiating the interest rate or terms of the loan, but there are other areas where lenders might be willing to wiggle. “Ask for an itemized list of expenses, and see what’s up for debate,” says Anne Postic, the editor of Mortgages.com. Pay attention to the little charges. “Do you see a courier or mail fee, but you did everything electronically?” Postic says. “Those fees may be standard for your lender, and they can be waived.” Lenders might also be willing to waive the application fee or pay some of your closing costs, decreasing your overall cost. Mortgage brokers can be extra-helpful here, so make sure to talk to them about lowering any added expenses and fees.
Down Payment Covered? There’s More: Info On Mortgage Lender Closing Costs
Troels Graugaard/Getty Images
If you’re gearing up to buy a home, one bitter pill you’ve got to swallow is that you don’t just have to pay for the house itself. You’ll also need to open your swiftly slimming wallet for a myriad of costs, fees, and taxes—the infamous closing costs. It’s a wide variety of fees that average 2% to 7% of the home’s purchase price. So on a $250,000 home, your closing costs would amount to anywhere from $5,000 to $17,500. Gulp!
After the stress of house hunting and the anxiety of the offer, you might feel like you can’t handle yet anotherhurdle. But closing costs are an inevitable part of the purchase process. Happily, there’s often wiggle room—at least on the costs that could be covered by the seller. Learn about what goes into your closing costs—and, even more important, how to whittle them down to size.
Inspection and appraisal fees
You won’t have much luck lowering appraisal fees—since the lender selects the appraiser, you’ll likely be stuck paying their costs without much room to negotiate. The home inspector offers more flexibility: Compare a variety of quotes to find the cheapest option. You even might be able to persuade the seller to cover some of these fees, depending on your market (this is less likely in a red-hot market). Granted, you won’t be saving a ton of money here, considering the average home inspection costs $300 to $500, but a couple of hundred extra never hurts.
Let’s hope you paid careful attention when shopping for your mortgage: Different lenders require different fees, and buyers should keep an eye out for “junk fees” like for the application, credit check, processing, and even the frustrating but all too common “miscellaneous” fee.
Also take a close look at the loan estimate you receive from your lender at the beginning of the process and compare it with the closing disclosure statement, which you’ll get three days before your scheduled closing. Make sure no unexpected charges snuck their way onto your bill.
If you decided to pay for discount points at closing to lower your interest rate, well, the bill is due. However, with the current low interest rates, that might not make sense for many buyers anyhow.
No, you can’t negotiate the existence of home insurance (most lenders require it to proceed with the loan), but you can certainly shop around. With the average premium stretching to $1,034 in 2015, your insurance will be a large cost regardless—but researching companies and comparing quotes goes a long way toward decreasing your expenses.
In many states, title insurance is a lender mandate that protects your ownership of the property, heading off a number of unsavory situations such as fraudulent claims, courthouse errors, liens, and family disputes. If your lender requires you to purchase title insurance, you can shop around for a better quote. Unlike home insurance, title insurance is a one-time fee, which can make its high cost (the average buyer pays $3.50 per $1,000 of purchase price) easier to swallow.
Sometimes, the seller will pay for title insurance; however, this is uncommon and may not be the norm in your state. Consult with your real estate agent to determine if this is an option for you.
Sneaky, sneaky: One easy way to avoid paying a mountain of closing costs is by asking the seller to cover some or all of the fees. You might not have much luck in a red-hot market, but then again, a seller might agree to cover closing costs if she is able to get the selling price she wants. This works for buyers who might be short on cash but can handle adding a bit more to their loan balance. FHA loans allow sellers to contribute up to 6% toward closing costs; VA loans allow 4%, and conventional loans permit 3% to 6%.
Most experts recommend closing on a house at the end of the month. Closing costs also include any interest that accumulates before the end of the current month—so closing on the 29th rather than the 1st of the next month will save you money.
But before you sign on the dotted line, there is one more consideration that might affect your closing costs—or even the entire purchase. Next up: the final walk-through!
What to Watch for on Your Final Walk-Through of a Home
You’re this close to owning a new home, you can almost taste it. The closing paperwork is prepared, your new digs passed the inspection, and—wonder of wonders—you’re even happy with your loan. Homeownership is just on the other side of the hill.
As long as the final walk-through goes all right.
OK, take a breath—there’s no need to panic. The vast majority of walk-throughs reveal no problems at all, and even if they do, most issues are easily fixed. Still, it can be an awkward, stressful process that can make you want to reach for the Xanax, especially for first-time buyers. Learn what to look for on your last trip through the house before the sellers hand over the keys. Your new keys!
Create a checklist
Before your walk-through, work with your Realtor® and real estate lawyer to create a comprehensive checklist covering all of your concerns with the home—the items that you’d like to see addressed or fixed, pronto. Look at your notes from previous walk-throughs and the inspection report to determine what areas of the house you should double-check.
“Simply having a checklist during final walk-through can greatly reduce any issues,” says Joe Stanfield, a Realtor in Charlotte, NC.
Other things to add to your inspection list include ensuring that all appliances work—make sure to turn them on while you’re in the house—as well as the bathroom plumbing. Check the windows, doors, and all outlets and lights. If anything is amiss, bring it up with the sellers as soon as possible and negotiate a fee the sellers can give you by personal check to cover the costs of fixing it yourself. It’s your last chance. Make it count.
Ensure required repairs were completed
Most sellers are good, ethical people, but you never know if you’re dealing with a sneak (or at least a transitory case of seller amnesia, whose symptoms include the oft-heard line, “Oh, I meant to get to that”) until the final walk-through. After all, the selling process can be hypercomplicated—leaving required repairs unfinished because priorities have been focused elsewhere.
“Sometimes a seller will have indicated that a repair previously negotiated during the due diligence period was completed, but the buyer finds out during the walk-through that it has not,” says Suzette Gray, a Realtor with Coldwell Banker in Charlotte, NC.
She recommends asking for copies of paid invoices for all repairs. If it’s a simple repair—such as patching up drywall or replacing a faucet—ask them to send you a photo of the completed work before the walk-through, “so there are no surprises.”
And while civility is key, this is not the time for preternatural politeness. If you do find something wrong that they’d vowed to address, it’s worth the awkwardness of bringing it up face to face and demanding compensation—after all, a promise is a promise. Right?
Inspect previously hard-to-reach spots
During your final walk-through, inspect everything you couldn’t check out earlier due to lack of time.
“You always want to ensure that you aren’t stuck with problems that were previously hidden from view,” says Seth Stisher from the Seth Realty Team in Charleston, SC.
Did an enormous Persian area rug cover the living room floor before? Was the couch pushed flush against the wall? Take a careful look at the hardwood below for any water damage or rot. This goes double if you’re buying a home with a basement once filled with boxes or clutter. Basements are ground zero for mold, water damage, and other structural issues, and it’s easy for sellers to hide (or miss) problems behind a layer of clutter.
Look for missing items—or secret swaps
Make sure all appliances and fixtures you’d liked during earlier visits are still present—or haven’t undergone a subpar substitution.
“If you were promised a chandelier and now there is an empty socket, that’s not going to fly,” says Janine Acquafredda, a Realtor in Brooklyn, NY. Basically anything connected to the home by plugs or pipes should stay—or if the sellers intended to keep something other than their furniture and belongings, it should be specified in the contract. Swapping out the bronze cabinet pulls for mediocre chrome replacements isn’t OK, either, and you have every right to demand them reinstated before the home changes hands.
Don’t panic over a little dirt
You might be expecting a picture-perfect, Architectural Digest–ready home, with polished hardwood floors and shining countertops—but few real estate contracts mandate those expectations, instead asking for the place to be “broom clean.” Which does not mean “scrubbed within an inch of its life.”
Usually that’s your job. Sorry.
“Everyone has a different definition of broom clean, and if the place is a little dirty it’s not the end of the world,” says Koki Adasi, a Realtor with Koki & Associates in Silver Springs, MD. Don’t stress over minor problems such as scratches in the hardwood or marks on the walls. It’s certainly not worth raising a fuss over—not only will it annoy the sellers, but chances are you’ll cause more damage during move-in.
Speaking of: With your final walk-through completed and closing paperwork signed, you’ve got only one step left: moving into your new home. Really.
The Final Walkthrough: What Real Estate Agents Need First-Time Buyers To Know
You slapped your John Hancock on the closing paperwork. You’re happy with your loan … well, as happy as you can be, considering the magnitude of the debt you just accepted. Stress dreams have mostly subsided, barring the occasional vision of some movers dropping your grandmother’s curio cabinet, shattering this priceless antique while they run off with your money.
Moving can be a pain in the you-know-what. That’s why we’ll share some expert tips and tricks to make the process as easy and pain-free possible.
- The Real Cost of Moving—Revealed
- How Much to Tip Movers: The New Rules
- 7 Ways to Save Money Moving—Without Begging Your Friends for Help
Do repairs and painting first
Before moving in, go through your home looking for any necessary improvements. Is the bedroom wall a nasty shade of taupe? Is the hardwood floor scuffed and dirty? Before your movers start lugging in boxes and placing heavy furniture, get it done.
“If you plan on painting or doing any light repairs, it’s easier to do those things before moving your stuff into the house,” says Kellie Tinnin, a Realtor® in Albuquerque, NM.
Skipping this step now can mean a headache later, when you’re forced to shove furniture into the center of the room just to paint the walls—or even take everything out of the space so you can access those scratched floors.
Hire a cleaner
For the same reason, there’s no better time to thoroughly clean your home than when there’s nothing in it.
“The best gift to yourself is to hire a professional cleaner to give it the once-over before you start to move your personal items in,” says Kinnaird Fox, a Realtor with Sotheby’s in New York City.
Yes, it’s an added expense, but moving into an impeccably clean home is guaranteed to make a stressful transition much happier. After all, wouldn’t it be better if you didn’t have to scrub out the soot and ash from the fireplace yourself—or spend two days on hands and knees polishing the baseboards? As Aziz Ansari‘s character on “Parks and Recreation” would say, “Treat yo’ self.”
Change the locks
As soon as you get the chance, hire a locksmith to change all the locks on your house (don’t forget the back entrance or any other access points). While we’re certain the seller is trustworthy, you never know who else might have keys to your new home. Better to be safe than sorry.
Doors aren’t the only locks that need changing: Buyers who use a community mailbox should make sure to have it rekeyed by the local post office, which should cost about $40 or $50. That’s not much at all for peace of mind that no one is digging through your mail.
Don’t forget the utilities
You don’t want a sudden power outage one month after your move. Even worse is when it’s your own darn fault.
“Many sellers are focused on their new move, and sometimes utilities are forgotten in the mix,” says Fox. By the time you move in, you should get in touch with all of your new providers to switch services to your name. If you’re moving into a standalone house from an apartment, you might be surprised by the variety of utilities you need to set up.
Check with the former owners to determine specifically what you’re paying for and what you need to set up, but expect to pay for water, gas, electricity, and trash—as well as any cable TV or Internet services you desire.
Check in with the HOA
Does your new home have a homeowners association? If so, contact the HOA to make sure everything is up to date. You’ll likely need to fill out transfer paperwork so it has a record of the new ownership. Even great HOAs can be difficult to deal with, requiring meticulous paperwork and cumbersome restrictions, so make sure you understand the bylaws and neighborhood restrictions of your HOA. You don’t want to get off on the wrong foot with your new neighbors, so full knowledge of how the association works is absolutely necessary.
Make a detailed list of your belongings
Moving is a complicated, messy affair—so take the opportunity to make an inventory of your belongings during packing, labeling each box with what’s in it.
“You’ll be grateful for the detailed description of contents stored within the myriad packing boxes that now surround you,” says Fox. There’s a bonus: A home inventory is worth its weight in gold if you have any sort of accident such as a fire, or a natural disaster leaves your home a wreck.
Figure out the best nearby takeout
All done? Boxes in place, furniture in your house—if not in the right spot? Movers gone? The proper way to celebrate is with takeout and beer, eaten on the floor. Do your research ahead of time so you know what you want to eat, and aren’t left scrambling an hour before closing time.
“Know where the best pizza place or takeout is nearby,” says Eileen O’Reilly, a Realtor in Burlingame, CA. “When you are crazy busy with moving in, you don’t want to get hangry.”
Congratulations! You’re finished … until it’s time to sell, that is. In the meantime, though, it’s time to resume doing what this whole journey is all about: enjoying your amazing new digs!