Have You Made Any of These 5 Credit Mistakes As a Homebuyer?

Have You Made Any of These 5 Credit Mistakes As a Homebuyer?

You’ve been renting for a while now and it feels like the timing is right to make the leap to homeownership. After all, your friends are all buying houses and your job feels pretty stable, how many more hints that it’s time to settle down could you really need?

Well, if you’ve given it considerable thought, are certain you can cover emergency costs like unexpected roof replacement or furnace repair and you have a realistic expectation of what you can afford, then full speed ahead. Buying a house is a trying experience, only made significantly worse by credit mistakes.

Top Credit Mistakes to Avoid When Buying a Home

Everybody makes mistakes, especially when it comes to their credit. The process by which your credit score is generated has long been veiled in shadows, making it doubly easy to misstep without even knowing it. However, there are certain mistakes that homebuyers make again and again, including these items that are obviously impactful to your credit score:

1. Not knowing what’s in your credit file to begin with. The last thing you need is a bit of a surprise when you go to apply for a mortgage. If you have collections that you’re unaware of, judgements that were never served to you or just plain bad information in your file, these items have to be handle now. It can take a while to completely erase the effects of any negative information in your credit file, so you need to get started right away.

Go to annualcreditreport.com for your once a year free credit report, download that thing and print it out. Check it line by line for accuracy and contact any collection agents that may be listed so you can work out a payment plan on that cable bill you left behind in your college apartment and totally forget to pay.

2. Applying for mortgages over a long period of time. Sure, it makes sense to pull your credit file six months to a year ahead of when you plan to purchase, since there might be surprises that will require time to fix. If you pull your scores yourself, it’s not as big of a hit to you as it would be it you had a lender checking your scores, say, monthly. When you are definitely ready to buy, do all your mortgage shopping within a 14 to 45 day window (depending on the scoring model and version). Ask your lender how long credit inquiries for mortgages will remain grouped, only being counted as a single credit pull. Otherwise, so many hard pulls will ensure that you don’t move forward to purchase.

3. Opening new lines of credit in anticipation of closing. Did you give any thought to skipping the line and buying a new couch today, rather than after your closing? How about doing that while maxing out a brand new credit line? This is a huge and terrifyingly common mistake that people make. It makes sense, it really does, you just want to be ready to get your move over with quickly once you get the keys.

The problem with a new inquiry is sort of a double whammy. First, it’s a hard pull on your credit, which will reduce your score slightly. Secondly, if you use that credit line, your debt to income will increase. In fact, depending on how much of that credit line you use, your utilization rate may also increase.

TL;DR: don’t take out new credit. Your credit score, debt to income ratio and possibly your credit utilization will take a big hit and your loan may be cancelled at the last minute when underwriting is re-verifying your application.

4. Maxing out existing credit lines. Moving is really expensive, even if you’re just moving across town. The moving truck alone can cost hundreds of dollars, and that’s if you do the job yourself. There’s nothing wrong with renting a truck, hiring a mover or even hiring a whole lot of movers, just do it after closing. If anything changes to the negative about your credit score, credit utilization and your debt to income ratio, as stated above, your loan can be cancelled. This is not a drill.

5. Failing to forward your bills. After closing, you could still make a few credit mistakes problems related to your move. Did you remember to pay the last utility bill at your old place? How about the broadband? It may seem like an obvious error to avoid, but when you’re in that moving stress haze, sometimes it’s all you can do to grab a pot of coffee and get moving again. Your credit is pretty good right now, don’t forget to pay those final bills.

Buying a house with a mortgage can feel like an exercise in paperwork collection, but the truth is that all of it is necessary for you to get the very best price from your lender. After all, what they’re really doing is trying to ensure your success with their loan. When you succeed, they succeed.

 

3 Simple Secrets to Keep Your Home Warm for the Winter

3 Simple Secrets to Keep Your Home Warm for the Winter

It’s been a busy year. It almost feels like we completely skipped over spring, summer and fall and found ourselves barreling head first into winter like a kid on an out of control snow sled. With those cold days just around the corner, now is the time to make sure all your heating equipment is safe to operate and ready to go when you need it. After all, you don’t want to learn that your furnace needs to be repaired by spending a freezing night regretting not having found out sooner.

Keeping the Home Fires Burning

There’s nothing like a toasty fire roaring in the fireplace, except maybe for forced air heating that distributes heat evenly throughout the house. Hey, old fashioned fireplaces are romantic, but they’re not the most efficient heat sources out there — that’s why forced air heating was invented and is subsequently the best thing imaginable when there’s snow on the ground.

Most of the time, the furnace and blower are the kinds of things people really pay zero attention to. You just set the thermostat and magic heat comes out of the vents magically. You may have never even given a second thought to any sort of maintenance plan for this equipment at all.

While that’s not unusual, you’ll be a lot happier if you adopt one this year.

Getting your furnace ready for the big chill isn’t all that difficult and takes just a little time. All you need to stay warm all winter are these three simple (not so secret) steps:

1. Remember the little things, they matter a lot. Check your furnace filter! Whether it’s just a little dirty or has three inches of dust on it, give it a toss. This is a good time to consider investing in an electrostatic filter that allows you to clean and reuse it again and again. Depending on the size of your furnace filter, they start around $30 and go up from there. An electrostatic filter can be washed often, keeping the air cleaner and making it easier for the furnace to do its thing.

While you’re at it, don’t forget your condensation line. If you just said, “My what?” take a look around the furnace until you find a tube or plastic pipe that goes from it to a pump or drain. That neato little tube tends to accumulate algae and other build-up, until it plugs entirely. Running vinegar through it once a month will help keep it flowing freely and your furnace performing at its best by moving any condensation away from the system. This is especially important if you’re using a heat pump, since it’s essentially an air conditioner with a valve that can go either forward or reverse, depending on your desired results.

Last, check all accessible ducts for air loss. Sure, you like your crawlspace and attic, but maybe not enough to share your heat with them. The tighter your ducts, the more air pressure in your system and the less heat loss you’ll experience. This is by far the most difficult part of basic furnace prep for winter.

2. Call your favorite HVAC professional for a cleaning and inspection. Yes, you cleaned the filter, but there are a lot of parts inside your furnace where dirt and dust collect over the years. If you’ve never had your furnace professionally serviced, now is the time. A pro will look over your air handler and heating elements to ensure they’re safe to use this winter. A cracked heat exchanger is no joke. This is how people die from carbon monoxide poisoning.

While you’re at it, maybe consider asking for a recommendation for a CO detector.

3. Put together your heating backup plan. This goes double if you live somewhere very cold, like Maine. If you live somewhere that’s not really cold at all, like Texas, your plan could be buying a coat. In Maine, or even New Jersey, you’ll want to choose an alternative heating source in case your furnace goes out. Even with a thorough inspection, you could have a small, but important, part go bad, throwing your furnace all out of whack.

Some good options (no, the fireplace sans blower is still a bad option) include infrared heaters or electric oil-filled radiators with safety shut-offs in case they tip. Combustion heaters should never be used indoors without proper ventilation. If you’re planning for a short-term heating solution, just until your furnace is fixed, they can be a lot more trouble than they’re worth. However, if you really want the warmth of wood heat, pellet stoves and catalytic wood stoves can make safe and energy efficient alternatives.