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4 Things Smart First-Time Home Buyers Do

4 Things Smart First-Time Home Buyers Do

Thinking about buying your first home? That’s exciting!

The thing that surprises most first-time buyers is the sheer number of things that need to happen in order to find, fund, and finally move into a new home. There’s a lot that goes into the process. Sure, you’ll be working with a mortgage loan officer and real estate agent, and it’s their job to be an all-around Sherpa, guiding you along the way. They’ll help you navigate all the steps.

However, there are four key items first-time home buyers should know in advance. The following four tips deserve the most attention and will help make sure you have a great home-buying experience.

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1. Get pre-approved.

Without financing, real estate transactions simply don’t happen. Loans make the housing world go ‘round. Getting a loan pre-approval squared away before home shopping is important, as you will see below.

First, pre-approvals involve formal documentation of your credit score, credit history, income, employment, etc. Pre-approvals carry much more weight than pre-qualifications. Pre-qualifications don’t involve any formal documentation, which is why they are essentially meaningless to everyone from real estate agents to sellers.

Pre-qualifications will give you confidence. You’ll know what loan program you want to use such as FHA or VA loans (these very common first-time home buyer programs). There’s a big difference since FHA loans require 3.5 percent down and VA loans are zero down loans. Knowing know your loan program and how much money you’ll need to get the deal done means no surprises later on.

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Pre-qualifications save you time because you will know the mortgage amount for which you qualify. You will shop faster and smarter by searching for homes you can afford. You’ll get better service from real estate agents. In fact, many agents insist that their clients are pre-approved. Everyone involved in this transaction deserves to know that their efforts are leading toward a tangible outcome.

Continuing with that thought, sellers may not let home shoppers view their home without a pre-approval. Furthermore, when you make an offer on a home, sellers will take a pre-approved buyer seriously.

2. Search with focus.

There’s never been a better time — in terms of efficiency — to shop for a home. Online searches, using tools like Zillow or Redfin, are fast and easy. And you can stay focused on properties you are likelier to acquire when you know your pre-approved loan amount.

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After searching for a while, you’ll want to narrow your choices and pick homes to view in person. This the time to leverage you real estate agent’s understanding of the surrounding area. Their input on schools and neighborhoods is invaluable. Modern technology, combined with your agent’s knowledge of the area, will help you determine the short list of homes to visit.

3. Keep your emotions in check.

Stuff happens. Real estate deals can go sideways for a number of reasons, including:

  • Offers rejected by sellers
  • Negotiations wind up going nowhere
  • Appraisals come in too low
  • Lenders need additional documentation
  • Home inspections reveal major issues with the property

A lot of these things are outside of a buyer’s control. This is why keeping emotions in check is important. Going back to the search phase above, having several homes on your short list can prevent buyers from fixating on just one property. Having choices helps reduce the potential for an emotional roller coaster.

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4. Don’t skip the home inspection.

Getting a home inspection before finalizing a deal is important. Surely you’d prefer not to have buyer’s remorse. Don’t skip this step, even if you’re planning on buying and rehabbing a fixer-upper home.

While all purchase transactions will require a property appraisal, some mortgage programs do not require an inspection. An appraisal will tell you and your lender what the home is worth, but an inspection will tell you if it needs any repairs.

There’s pretty good chance an inspector will find some imperfections in the home you want to buy. The good news here is that inspections:

  • Identify issues with the property
  • Come from a neutral third-party
  • Help create space for you and your Realtor to negotiate with the seller

Asking a seller to fix something before you buy it or come down on the price is pretty typical after an inspection. More importantly, you’ll know what you are buying so the chance of any surprises is very small. The idea here is to prevent you from encountering unforeseen expenses after moving in.

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Last Updated on April 3, 2019

How to Nix Your Credit Card Debt in Less Than 3 Years

How to Nix Your Credit Card Debt in Less Than 3 Years

Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

Hint: there are ways that are easier than you think.

1. Consider Consolidating Multiple Credit Cards If Possible

This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

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Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

2. Try to Pay the Full Balance You Spent Each Month at the Very Least

You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

3. Pay Extra When You Can – Every Small Amount Counts

This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

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It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

4. Create a Plan on How to Pay Extra

Back to the main point, having this plan is giving you one less thing to think about.

This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

5. Cut out Costs for Services You Do Not Use

If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

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6. Get Aggressive About It

Consider these points:

Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

7. Reevaluate Your Progress at Set Intervals

Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

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Finally (and most importantly)…

8. Keep Trying

Do not get discouraged. Pushing it off will make it worse. Just keep trying.

Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

Start Knocking out Your Debt Today

The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

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Featured photo credit: Pexels via pexels.com

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