Sug Jandu's Blog
Preparing to buy a home is a long and stressful process for many. You’ve spent months, or even years, saving for a down payment, planning your future, and building your credit to ensure you get the best possible interest rate on your loan.
Then you find out, when getting preapproved for a mortgage, that your credit score dropped by a few points. So, what gives?
There’s a lot to understand about how credit scores affect mortgages and vice versa. In today’s post, I’m going to attempt to cover everything you need to know about how applying for a mortgage can affect your credit score so you’ll be prepared when it comes time to buy a home.
Prequalification, preapproval, and credit checks
There are a lot of misconceptions about what it means to be preapproved or prequalified for a loan. Some of it is due to the jargon that is used in real estate transactions, and some of it is just a marketing technique on the part of lenders.
So, what does it mean to be prequalified vs preapproved?
The short version is that getting prequalified is a quick and easy process to determine whether you’re eligible to lend to and how much you’re likely to receive. It involves a quick review of your finances, and often includes either a self-reported or soft credit inquiry.
A “soft inquiry” is the type of credit check that employers typically use for a background check. It doesn’t affect your credit score, as you are not applying to open a new line of credit. In fact, many lenders’ process for prequalification is a simple online form that doesn’t even require a credit check. We’ll talk more about the difference between soft inquiries and hard inquiries later.
The simplicity of prequalification makes it a simple and easy way to get started. But, it isn’t always accurate in how well it predicts the type of mortgage and loan amount you can receive. That’s where preapproval comes in.
When you get preapproved for a loan you fill out an official application (you often have to pay for these). This will request documentation for your finances and assets, and will ask your approval to run a detailed credit report.
These credit reports are considered “hard inquiries” and are a vital step in getting approved or preapproved for a mortgage. However, they also, at least temporarily, lower your credit score.
Why hard inquiries lower your credit score
When any creditor, be it a bank or credit card company, is determining whether to lend to you, they want to know that you are a safe investment. To determine this, they want to know how frequently you pay your bills on time, how much you owe to other creditors, and how financially stable you are right now.
When you make multiple inquiries in a short period of time, it’s a red flag to lenders that you might be in trouble financially. Thus, hard inquiries will lower your credit score for 1 to 2 months.
Applying to multiple lenders: the silver lining
When borrowers apply for a mortgage, they often shop around and apply to multiple lenders. While it may seem that all of these hard inquiries will add up and drastically lower their credit score, this isn’t the case.
Credit bureaus take into account the source of the inquiries. If they realize that you are applying for mortgages, they will typically recognize this as rate shopping and group these applications together on your credit report, counting them only as a single inquiry. This means your score shouldn’t drop multiple times for multiple mortgage preapprovals that were made within a small time frame.
Now that you know more about how mortgage applications affect your credit score, you can confidently shop around for the best mortgage for you and your family.
7 Solomon Pond Rd, Northborough, MA 01532
If your home has hardwood floors, you’re going to want to put carpets in and around the home. This helps to warm the space up both visually and physically. How do you know what size area rug to choose or what colors to choose? It’s quite simple. There are a few rules of thumb that you should know in order to help you choose the right rug for each room of the home.
First, you’ll need to measure the seating area. You’ll select the rug that’s the closest size up from those measurements. Choose the next size up from that so all of your furniture can rest on the rug. Alternatively, you can set the room up so that no furniture rests on the rugs and the carpet simply sits in front of the furniture. This is all a matter of taste.
Fill The Room With A Rug
You can fill an entire room with a rug as well. Just measure the room and subtract a 2-foot perimeter around the room for floor space.
Layer Your Rugs For A Great Visual Effect
You can create more definition in your room by layering rugs. You can put a smaller rug on top of a larger rug for something a bit visually interesting in the room. Smaller rugs help to define a seating area, so you would layer those rugs on top of a larger rug.
Placing movers or sliders under furniture is more than just for rearranging a room. These little disks help to protect both your hardwood floors and your carpets. You’ll have floors free from scratches, tears, and scuffs. If you think that furniture can’t ruin carpets, think again!
Dining And Kitchen
For rugs in your dining area, the carpet should surround your table. The rug needs to extend out a bit beyond the focal point of the room. Measure about two feet beyond your table as a good rule of thumb.
In the kitchen, make sure that your rugs are slip resistant. Put rugs near the places that you tend to stand the most like the sink and oven. You could put several area rugs in the kitchen to create a warmer feel in the room without making it hard to clean.
In your bedroom, one of the most important purposes for a rug is having a soft, warm place for your feet in the morning. An area rug should extend out at least two feet beyond the bed itself, which is the focal point of the room. If you’re using smaller rugs, place them strategically so that your feet are warm yet the bed is still the main visual focus in the room.
Remember that your rug should be an accent to a room. Your walls are the dominant color and your rug will only add to the beauty. Pick a color that blends well with the rest of the scheme of the room.
5 Redwood Path, Hopkinton, MA 01748
If you recently added your house to the real estate market, it may be only a matter of time before you sell your house. In fact, if you know what to expect after a home listing is published, you can plan accordingly for all stages of the home selling journey.
Now, let's take a look at three tips to help you prepare for the home selling process.
1. Craft an Engaging and Informative Home Listing
Oftentimes, a home listing may dictate a seller's success. If a seller creates a listing that fails to effectively highlight a house's benefits, buyers may shy away from the residence altogether. On the other hand, a seller who crafts an engaging and informative listing can increase the probability of a fast, profitable home selling experience.
Your home listing should include relevant information about your residence, including details about your house's age and condition. Also, it may be beneficial to include high-resolution photographs of your house to help buyers envision what life may be like if they purchase your residence.
There is no need to stretch the truth in your home listing, either. Because if you fail to provide homebuyers with accurate information about your home – and these buyers discover "hidden" home problems during an inspection – you ultimately may put a potential home sale in jeopardy.
2. Make Your Home Available to Potential Buyers
As a home seller, you should strive to make your residence available to as many potential buyers as possible. Thus, if a buyer requests a home showing on short notice, you should be willing to temporarily vacate your residence to accommodate this buyer's request.
In addition, you should try to keep your house neat and tidy. That way, if a buyer requests a showing on short notice, you won't have to worry about scrambling to clean your home.
3. Know What Your Home Is Worth
After you list your house, buyers will read your home listing and set up showings. And if a buyer is truly interested in purchasing your home, he or she likely will submit an offer.
A seller generally has only a limited amount of time to assess an offer and decide whether to accept, reject or counter it. Fortunately, if you conduct a home appraisal, you can find out what your house is currently worth.
With a home appraisal, a property expert will examine your residence, as well as evaluate pertinent housing market data. Next, this property expert will offer a home valuation that helps you understand the true value of your house.
Lastly, if you need assistance as you sell your house, it may be helpful to hire a real estate agent. This housing market professional can teach you about the real estate sector and help you make informed decisions at each stage of the home selling journey.
Take the guesswork out of selling your house – use the aforementioned tips, and you can boost your chances of enjoying a fast and successful home selling experience.