The One Important Thing You Should Consider Before Buying a House

Renting is convenient in your early years, as you’re just getting a job and getting your life in order, perhaps even moving around for jobs, relationships and adventure.

But as you get older, you may start thinking about buying a house, whether because you’re partnered with someone or you are in a long-term career and want to settle down somewhere. After all, when you rent, your money is spent on a temporary place to live; but when you own a house, your money is spent on paying down the mortgage of a permanent asset that you own.

The Homebuying Process

Buying a house is a lot of work — you need to figure out what you want in a house, get pre-approved for a mortgage, find a real estate agent who can help you, go house-hunting and ultimately make an offer. And the work doesn’t stop there. Most people who have bought houses say that the real work begins once your offer is accepted and you move into your home.

Maybe you’re not in the homebuying process yet; maybe you’re still dreaming of what you want in a house, or which neighborhood or city you’d like to live in. Maybe you’re simply visualizing your future kids playing in the backyard or having the neighbors over for a barbecue on a warm summer evening.

No matter what stage you’re at, even if buying a house isn’t something you’re actively working on at the moment, you can take action today to help prepare by doing one simple thing: having a good credit score.

Work on Credit Now, Benefit Later

When you go to a bank to get pre-approved for a mortgage, the bank will check your credit and use that to help decide if they’ll lend you money and, if they do, what your interest rate will be. If you’re approved, the bank will likely give you a preliminary loan amount number that you can use to help you start your house-hunting. When you make an offer on a home, you’ll go back to the bank and, as long as your credit is still in good shape, you should be able to get that pre-approved mortgage.

In other words, your future homeownership really hinges on your credit. Therefore, if you plan to buy a house in the future (even if it’s a couple of years away in your mind’s timeline), you are already taking action today on that house purchase.

When you use your credit card, when you pay your credit card off, when you borrow money for a car loan, when you decide to apply for another credit card, when you lend your credit card to a friend — everything you do that impacts your credit is ultimately impacting your eventual homeownership, from how much money you’ll get for your mortgage to how much interest you’ll pay.

So if homeownership is a dream that you hope will turn into a reality someday, consider the decisions you’re making now and how they’ll influence your homeownership. To get started, you can see two of your credit scores for free on Credit.com. These scores are updated each month, so you can see where you stand now and what you need to do to get to where you want to be before heading to the bank to talk about mortgages.

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Image: gradyreese

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The True Cost of Living in America: Columbus, Ohio

When you think Ohio, you probably think Cleveland, and you might think Cincinnati. Almost certainly, you don’t think Columbus, but here’s a secret: Ohio’s capital city is larger than its more famous neighbors to the north and south. In fact, it’s the largest U.S. city to make Credit.com’s top 10 most affordable cities list. By some measures, it’s larger than Denver, Seattle, and Washington, D.C. And yet, it doesn’t feel crowded, said native Stu Stull.

“Best thing about Columbus is the ease of getting around and not having to waste time waiting for everything like Chicago, Washington, LA and other cities,” said Stull, 58. “There are no hour-and-a-half waits for dinner, no looking for 10 to 15 minutes for a parking space or waiting in traffic for way too long.” Except for college football Saturdays, of course.

stu stull

Stull was born and raised in the central Ohio city. He left briefly for Texas, but returned years ago and never looked back. A city employee, his mortgage on a small 3-bedroom house with a garden and screened-in patio eats up only 20% of his income.

“I can get downtown in half an hour and I am 10-plus miles away. Pro football, basketball, and baseball are within a two- or three-hour drive,” he said. The NHL’s Columbus Blue Jackets are right in town. “Concerts, like the Rolling Stones last year, and other entertainment comes here often.”

The Columbus economy weathered the recession better than many Midwest towns, thanks to its status as home of The Ohio State University and state government. But Columbus has a thriving private sector, too. Plenty of financial firms are located there — inexpensive housing helps keep labor costs down — like JPMorgan Chase, PNC Financial and Nationwide Mutual Insurance. It’s also a haven for fashion, and home to firms that operate Victoria’s Secret, Abercrombie & Fitch, and other well-known brands.

The Columbus economy was recently projected to possibly overtake Cleveland by 2018, according to the Columbus Dispatch.

Stull, who is a graphic designer and a part-time musician, said Columbus is still a place with a strong middle class.

“My experience when traveling to other cities is that life is easier here,” he said. “Most people are not living like a Kardashian no matter where they are.”

Columbus also has both old-world charm and hip hangouts. The historic district, German Village, makes drivers slow down with cobblestone streets. They should slow down anyway to see the gingerbread-like homes built by German immigrants who settled the area. The neighborhood is also home to one of America’s best independent book stores, Book Loft. Meanwhile, the Short North, near the city center, is a busy strip full of high-end restaurants and local pubs; it has the feel of an outdoor festival during every football weekend.

Columbus has its critics, of course. The winters are gray, and some residents lament that it’s a bit boring compared to coastal cities like New York. But with a median home sales price of around $117,000, perhaps there’s enough money left over for frequent trips to the Big Apple.

Stull might be a bit biased, but he said the music scene is surprisingly robust.

“It is a place without the extremes of other places,” Stull says. “To quote native James Thurber, ‘Columbus is a town in which almost anything is likely to happen, and in which almost everything has.'”

Life in Columbus, Ohio, by the Numbers

  • Affordable Cities Ranking: 9th
  • Housing Poor Residents: 30.4%
  • Median Home Sales Price: $117,475
  • Median Household Income: $46,481

Remember, a good credit score can help make housing more affordable in any area since it generally entitles you to better rates on a mortgage. Landlords also often look at a version of your credit report when considering tenants. As such, it can be a good idea to check your credit before you apply for a new place of residence. You can do so by pulling your credit reports for free each month at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.

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Main Image: aceshot; Inset Image Courtesy of Stu Stull

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