Buying a home for the first time is so exciting! But be careful not to get carried away, and bite off a bigger financial commitment than you can chew.
I love working with clients who are getting ready to purchase property -- it's such a happy occasion, and I'm honored to be trusted to ensure that the whole experience goes as planned. I had a couple come to me in the past who had been married for just over a year, and were ready to move out of their apartment and into a house that they could raise a family in. They both worked good jobs that they had been at for over three years each, and they made sure to live within their means.
They knew that they were financially stable now, but that's not how it had always been. They both had struggled to pay off their student loans, and each had fallen behind a few times. However, the man's score was lower than either of them expected! As we went over it together, we found several reporting errors from various credit cards that stated a late payment, though he insisted he had been timely. This initial score was poor enough to raise their mortgage interest rate significantly.
The next time we met, he reported that he had gone through the entire report, and corrected each of the "late" payments that were errors. The new score was higher, and dropped their estimated interest rate into the acceptable level. They were ready to apply, and I'm happy to say, they are living in their beautiful new home!
Your credit rate plays a huge part in your experience buying property. How can you prevent these surprises when you go to buy a home?
1. Make a Schedule -- When you've made the decision to start looking for a home, make a financial calendar for yourself. Spreading out tasks will make it all seem less daunting, while ensuring that everything gets done. Items that should be included are:
o Getting copies of your credit report from all three of the major reporting agencies -- Experian, Equifax and TransUnion.
o Fix obvious mistakes on your report.
o A date to pay down your debt by.
2. Pay down your debt -- The lower your debt when you apply for a loan, the better your score, and the lower the interest rate. Having debt creates more debt, so make a plan to repay before you make a big purchase like a home.
3. Take the time you need -- If your credit is not as high as you'd like, be prepared to postpone your purchase a few months to a year. Waiting and allowing yourself time to demonstrate financial stability to raise your score will pay off for years to come.
These steps aren't going to magically make financial problems disappear, but they will put you on the right track to be ready to purchase a home without putting strain on your credit report. Even a slightly higher interest rate could mean a difference of several thousand dollars over the years it takes to pay off your property, so investing time increasing your score is well worth the wait.
It's no surprise that Omaha is consistently ranked a top place to live in publications like Parenting magazine and CNN.com, because this Midwestern city is actually incredibly easy on your wallet. The cost of living is 12 percent below the national average, with housing expenses 21 percent lower. According to Rent.com, average studio apartments cost just $440 per month, while a one-bedroom goes for about $515. To top it off, the average wage for full-time civilians in the Omaha-Council Bluffs area is $24.75 an hour--$2 more than national rates.
Seems like the classic Judy Garland film, Meet Me in St. Louis, was onto something. This port city on the border of Missouri and Illinois sports a cost of living that's a full ten percentage points below the national average. Rent is the main steal here--the cost of housing is 22 percent below the nation's average (that means you can look out for a median rent of just $535 a month, according to Rent.com). The best part? This manufacturing hub brings the city high wages, with the average full-time worker earning $22.63/hour, and those in manufacturing and construction faring even better--earning an average of $24.23/hour.
They say that everything's bigger in Texas, and in this aviation hub, your wallet could be too. That's because these Texas cities combine wages that are on-par with the national average ($22.52/hour for full-time civilians), but cost of living rates that are much lower--about 8 percent below the national average in Dallas. The state is also lucrative for union members, who make about $25.17/hour.
This Ohio city was named the best place in the nation to raise a family by Businessweek in 2009 and it's not hard to see why. The state capitol has a cost of living that's 8 percent below the national average, and it's also about 14 percent below the average for housing (two-bedroom apartments go for about $650-850, according to Rent.com). Full-time civilian wages in the Columbus-Marion-Chillicothe area come out at $22.31/hour, just under the national mean.
Another Texas city with big hair and big wages. Full-time civilian workers can expect to make $25.14 in the Houston-Baytown-Huntsville area, and in manufacturing and construction jobs the rate is much higher, at $29.12/hour. It doesn't hurt that the cost of living is 7.8 percent below the national average, with groceries especially cheap at 15 percent below. That means you can snag a dozen eggs for just $1.52, according to BankRate.com (the average price of eggs in May 2012 was $1.69, according to the Bureau of Labor Statistics).
While water may be scarce in this desert town, money isn't. Full-time civilian workers make an average of $23/hour, and the cost of living stays low at 3.5 percent below the national average, housing at 8 percent below and utility prices at 13.3 percent below the average.
The famed research triangle has a lot more going for it than just basketball rivalries. In the Raleigh-Durham-Cary area, full-time civilian workers make $24.56, nearly $2 above the national average. The total cost of living is 2 percent below the national average in Raleigh and more than 3 below in Durham, but housing costs are especially enticing. They're 11.2 percent lower than average in Raleigh and 13.4 percent lower in Durham, where the cost for a two-bedroom apartment is about $780, according to Rent.com.
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