5 Smart Money Moves Before Buying a Home
Financial Education Series
Quick Wins That Make a Real Difference
Thinking about buying a home? These five moves aren't overwhelming life changes—they're practical steps that prepare you financially. Each one takes less than a month to implement but can save you thousands.
🏡 Ready to Take the Next Step?
If you've been thinking about buying a home, get pre-approved to see exactly what you can afford. It's free, takes minutes, and there's no commitment.
5 Smart Money Moves to Make Now
Pay Down Your Credit Cards to Under 30%
Credit utilization (how much you owe vs. your credit limits) heavily impacts your mortgage rate. Get all cards under 30% utilization, ideally under 10%. This alone can boost your credit score 30-50 points.
Example:
$5,000 credit limit → Keep balance under $1,500 (30%) or $500 (10%)
Time investment: 1-3 months • Potential savings: $50-150/month on mortgage payment
Build a "Closing Costs" Fund
Most people focus on the down payment but forget closing costs (2-5% of the home price). On a $300,000 home, that's $6,000-$15,000 you need IN ADDITION to your down payment.
What closing costs cover:
- • Appraisal ($400-700)
- • Home inspection ($300-500)
- • Title insurance ($1,000-2,000)
- • Loan origination fees (0.5-1% of loan)
- • Prepaid property taxes & insurance
Time investment: 3-6 months • Why it matters: Prevents last-minute scrambling
Stop Moving Money Between Accounts
Lenders need to verify where your down payment came from (anti-fraud rules). Large transfers between accounts create paperwork headaches and can delay your closing. Keep your money stable for 2-3 months before applying.
⚠️ What triggers extra scrutiny:
- • Cash deposits over $500
- • Money transfers from other people
- • Moving money between your own accounts
- • Selling investments or crypto
Time investment: Just don't do it • Why it matters: Smooth, fast approval process
Hold Off on That New Car (Seriously)
A new car payment will reduce how much house you qualify for AND hurt your debt-to-income ratio. A $400/month car payment can reduce your home budget by $70,000+.
The math:
$400/month car payment → Lenders see that as $400 less you can spend on housing → At 7% interest, that's $70,000 less home you qualify for
Time investment: Wait 6-12 months • Potential impact: Qualify for $50-100K more home
Get Your Financial Documents in Order Now
Don't wait until you're under contract to hunt for documents. Gather everything now so you can move quickly when you find the right home.
Start collecting now:
- ✓ Last 2 years W-2s
- ✓ Last 2 years tax returns
- ✓ Last 2 months bank statements
- ✓ Recent paystubs (30 days)
- ✓ Photo ID
Time investment: 1-2 hours • Why it matters: Fast pre-approval when you need it
The 3-Month Preparation Timeline
Here's how to stack these moves for maximum impact:
Month 1
- • Start paying down credit cards
- • Gather financial documents
- • Stop moving money around
Month 2
- • Continue credit paydown
- • Build closing costs fund
- • Check credit reports for errors
Month 3
- • Get pre-approved
- • Start house hunting
- • Maintain good habits
Real Impact: Before & After
❌ Without Preparation
- • Credit score: 660 (high rate)
- • Surprised by closing costs
- • Scrambling for documents
- • Deal falls through
- • 7.5% mortgage rate
✅ With These 5 Moves
- • Credit score: 720+ (better rate)
- • Closing costs ready
- • Documents organized
- • Smooth closing
- • 6.5% mortgage rate
Result: On a $300,000 loan, that 1% rate difference saves $179/month = $64,440 over 30 years
Start Your Home Buying Journey
Ready to see what you can afford? Get pre-approved and find out your exact buying power. It's free, takes minutes, and shows you're a serious buyer when you find the right home.