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Five Steps to Take Before Buying a House

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Five steps women should take before buying a house.

By Jenny Hoff, Headshot by Kevin Garner 

Austin is consistently rated one of the most livable cities in the U.S., so it makes sense you may want to lay claim to your own little piece of this vibrant town. But buying a home is about more than shopping for the best deal; it’s important to plan ahead so you can qualify for the best mortgage rate, avoid pricey insurance premiums and ensure you can afford signing on the dotted line. Here are some tips for how to financially get your house in order.

1. Boost your credit score. Before you start house hunting, the first thing you’ll want to know is your credit score, which you can obtain for free at creditkarma.com. If you have a score higher than 760, you’ll have a better chance to qualify for a low interest rate, which can save you hundreds of dollars a month. If your score is only fair to good, take the next six months to improve it by paying all your bills on time and going through your credit report to dispute any errors that might be bringing your score down.

2. Don’t apply for credit cards. While having a good credit mix (credit cards, installment loans, mortgage) can generally boost your credit score, the few months leading up to your loan application is not the time to add a new card to your wallet, as it will temporarily ding your score. Even if a card comes with a great sign-up bonus, wait until you’ve been approved for your home loan before applying for another line of credit.

3. Beef up your savings. When the housing market is hot, it’s tempting to want to jump in before prices go up. But unless you’re a seasoned house flipper or real-estate investor, it’s wise to make sure you have a solid down payment plus closing costs and an emergency fund in the bank. If you put at least 20 percent down on a home, you can avoid a higher rate on private mortgage insurance that comes with a conventional loan.

4. Calculate your total monthly expenses. One of the sticker-shock moments for many first-time Austin homebuyers involves the relatively high property taxes that come with the house. Even if your mortgage payments seem doable, make sure you’re calculating the amount of property tax you’ll owe and the cost of water and electricity, which can be double or triple your current bills, depending on the size of the house you buy.

5. Find a good real-estate agent. Look for more than just personality when shopping for an agent; make sure your chosen agent is a tough negotiator, can work with your schedule when scouting houses and is an expert in the area where you want to live. If you prefer independent searches, Redfin is a good way to check out homes without feeling pressured to make a decision before you’re certain. Either way, make sure your agent knows how to negotiate and ask the right questions before committing to a purchase.

TO YOUR CREDIT: Studies show more than one in five consumers have errors on their credit reports, which can definitely hurt the overall credit score. Request a free copy of your report from each of the three bureaus from annualcreditreport.com and look for any suspicious activity. You’ll have the option to dispute false information and potentially clean up your credit history and boost your score before applying for a loan.

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