First Time Home Buyer in Colorado Tips
Buying a home, especially your first home, is one of the most exciting and rewarding things you can do with your life. If you’ve been renting you will no longer be throwing money to the winds each month, you will be investing in real property, an investment that can pay off big in the years to come. But there are some things that first time homebuyers should keep in mind when getting their first Colorado mortgage. Things like deposits, fees, home prices and locations. All of these play a role in your financial future and need to be considered. Know Your Budget Many first time buyers start the house hunting process by looking at homes available for sale without knowing what their house budget is. Before potential homeowners even begin the house hunting process, they should know how much house they can afford. Some lenders will loan money up to three times the income of the buyer, but some will go lower and some higher. Start with a simple monthly mortgage calculator that will allow you to see monthly payments (house, insurance and taxes) on a purchase price. From there, you will have an idea of your house budget. Keep in mind that your lender may have a different price for you so you should always attempt to get prequalified so you are better informed when you begin your house hunting. Fill Your Piggy Bank The majority of lenders will require buyers to place a deposit on their home. These deposits can range from 5% to 25% of the purchase price and buyers should start saving years before they plan on buying in order to have the largest deposit possible. Why is a deposit so important? There are two main reasons. One is that lenders want to see that you can save your pennies. The second reason is that the larger your deposit the more equity you have in your home immediately. Find the Right Mortgage Not all mortgages are created equal and many first time homebuyers have all made the same mistake. They invest most of their time into finding the right home instead of finding the right mortgage. While finding the right home is important, so is the right mortgage. It is something you will have for years to come and you don’t want to find yourself in five years stuck with a mortgage that you can’t live with. Research the different loan programs available to you, and then research a little more until you are comfortable with the right loan, from the right lender. Don’t Settle Your first mortgage may not be your last but you will have it for quite a number of years. Don’t settle for anything less than satisfactory. If you aren’t 100% happy with the terms, keep shopping around. Many first time buyers are in a hurry to find the perfect home and close on it that they think that not locking their rate is okay or that settling for a larger than normal interest rate will not affect them. Don’t let the excitement of your first home purchase to overshadow the financial constraints that less then favorable terms could bring to you. Make sure that you are comfortable with your loan before signing all of the documents. Ask yourself if in ten, fifteen, twenty years, will these terms still be doable? Buying a home is exciting but homebuyers need to make sure that they aren’t letting their excitement dictate them. Be informed and educated so that you don’t find yourself with terms on your loan that you can’t meet.