5 Ways to Protect Your Identity When Buying a Home
Buying a home is probably the most expensive purchase you'll ever make. And, as you might expect, getting those keys isn't exactly a walk in the park. The journey from open house to closing day can be a drawn-out one, with what seems like countless appointments to schedule, forms to fill out and fees to pay. And that's not the only thing to worry about: Disclosing your personal info when applying for a mortgage or even commissioning a credit report, among other things, makes a home buyer up to three times more likely to become a victim of identity theft. With so much at stake, it's important to protect yourself. One smart way to do that is with a legal insurance plan. A policy with ARAG®, for example, provides you with tools to monitor your identity and a network of attorneys to help decipher legal jargon. But as a home buyer, you have to take matters into your own hands too. Here are five actions to get you started.
1. Get a free credit report
If you plan to finance your home, your credit score is a key factor banks use to determine your interest rate for a mortgage. Checking your credit report before you start house hunting will help you better understand what kind of monthly payments you can afford, and it will give you the chance to spot any unusual behavior or unfamiliar accounts. (You can get a free credit report every year from annualcreditreport.com.)
2. Choose a team you trust
Buying a home takes a village of professionals on both the buyer and seller sides (think real estate agents, attorneys, an appraiser and a home inspector). Since each of these people will have access to your personal info, it's important to vet the pros you have control over hiring. Ask friends for referrals, read online reviews, and check that licenses and credentials are up-to-date. Make sure you're comfortable with all potential hires and trust them to thoroughly explain legal documents, including what's required of you and what you'll be held accountable for. (Want a second opinion? ARAG's plans give you access to attorneys who can interpret contracts and answer your questions.) After all, there's a lot of money at stake, and it's your name that'll be on the dotted line.
3. Sign up for credit monitoring
One of the most stressful parts of home buying is revealing in-depth personal and financial info—think pay stubs, tax returns, bank statements, social security numbers and investments—to people you don't know. Since there'll be a lot of credit activity under your name in a short period of time, it's easy to overlook identity theft, even if you're vigilant with guarding your online information and monitoring your accounts. Purchasing a Legal Protection Plus plan through ARAG can provide you with a credit monitoring service that'll notify you when someone runs a credit check on you, takes out a loan, or opens a new credit account in your name.
4. Use caution online
Throughout the process, you'll be filling out a lot of forms and divulging personal information across a variety of sites. To prevent identity theft, only use a secure computer (ideally, your personal one) on a private Wi-Fi network to download or send the documents you need. Also make sure all of your passwords are distinct and varied (using the same password for every login is a big no-no). Avoid phishing schemes by manually entering URLs in your browser, rather than opening links from emails. And if you do need to print hard copies of sensitive info, hide your social security number and credit card and bank account numbers unless absolutely necessary, and shred documents when no longer needed.
5. Pay with credit cards
There are fees associated with the mortgage application process and closing on your future home, and it's in your best interest to use a credit card for these purchases. Here's why: Credit cards offer better fraud-protection services than if you were to pay by cash, check or debit card, and—bonus!—depending on the card, you could rack up points, miles or cash back to put toward a future vacation. A little R&R after buying a home will be a well-deserved getaway (as long as you book it securely).
The Nest and ARAG present Adulting 101, a sponsored series full of real-world advice for handling all the practicalities of homeownership. Visit ARAGlegal.com/thenest to download a free organizer with checklists and work sheets to help make owning a home less stressful.