The One Important Thing You Should Consider Before Buying a House

Published

April 5, 2023

Jeanne Kelly is a nationally recognized authority on credit, the founder of The Kelly Group and the author of The 90-Day Credit Challenge. She has appeared on The Today Show, and blogs for Huffington Post & Poughkeepsie Journal. Visit her online at www.JeanneKelly.net.

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 every 14 days, 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.