Getting ready to buy your first home can feel a bit like a trip into the unknown – one with pretty high stakes too. By taking the process in stages, you can be sure that you are prepared to take the plunge and properly prepare your finances before the big purchase. Read our Colorado first time home buyer tips to get you started on your path to homeownership.
Get Your Credit Score Up
Buying a home is likely going to be the biggest purchase of your life, so getting a good interest rate will make a huge difference in how much you pay over the life of the loan. Your interest rate is largely determined based on your income and your credit history.
Get your credit score up as high as you possibly can before applying for a mortgage. If your score is low, it is worth it to take some time to work on it. Your score will have a big impact on your interest rate. Check out our credit builder loan to help improve your credit.
A good place to start if you want to get your credit score up is to get a full credit report. This will tell any about any outstanding debts, how long you have had all of your accounts, what your total debt amount is, and will even tell you what’s hurting your score and what’s helping. Take the advice seriously and fix the things you can, like paying off outstanding debt and cutting back your credit card spending. In the months before you apply don’t make any changes to your credit, such as take out a new credit card or apply for anything that might run a hard credit inquiry, this can cause dips in your score.
Get Pre-Approved for a Loan Before You Look
Don’t fall in love with a house you can’t afford! Before you even start to look, meet with a loan officer and get pre-approved for a mortgage amount. Have the loan officer show you what your monthly payment would be at different loan amounts and settle on an amount that is comfortable for you to pay back. Remember – you don’t have to use the total loan amount you are approved for!
Once you start looking, save yourself some pain and don’t go see houses you can’t afford or that would be at the top of your budget. If you are using a realtor, be firm on what your ceiling is. Trying to afford a house out of your reach won’t end well. With enough patience, everyone can find a home that will work for them in their price range.
Pick an Area or Neighborhood & Don’t Settle
You know how they say location, location, location? Well, it’s true how important it is – location is everything. Pick a town or neighborhood you want to live in and stick to it. Weigh your commute to work, proximity to amenities and hobbies, and even the crime rate and school districts.
Is there a part of town you would hate to be in every day? Avoid looking at houses in that area. Is there a neighborhood you would love to live in but are worried you can’t afford it? Just stick with the hunt and go see houses right when they come on the market. With a little luck and patience, you might be the one to snag that rare deal.
Colorado First Time Home Buyer
The Colorado landscape changes quickly and can be intimidating for seasoned investors, let alone first time home buyers. Prepare for your first mortgage as early in your financial life as you can and find a few trusted professionals like us to help along the way.