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6 Steps First-Time Buyers Should Make Before Buying

Finding a home is exciting for first-time homebuyers, but it can also be a little daunting. Becoming a homeowner in Northern Colorado isn’t just about finding the right location, picking the perfect relator realtor and making an offer, there are a few steps you need to take to make the experience a smooth one.

1. Learn the Process

Interest rates, mortgage insurance, closing costs – if these terms don’t sound familiar you’ve probably never purchased a home. There’s a lot of homebuying lingo you need to understand. If you’ve never purchased a home, it’s a good idea to attend a first-time homebuyer seminar. The U.S. Department of Housing and Urban Development maintains a list of homebuying resources by state, and it includes homebuying seminars. Another option is to talk to a credit counselor. You want to make sure the counselor does not work with a lender to avoid being influenced by someone who has financial interest in the loan you choose.

2. Set a Savings Goal

You’ve probably heard you need to save 20% of your mortgage for a down payment, but there can be other options to consider, especially for first-time buyers. The amount needed for a down payment can depend on the type of loan and a lender’s requirements. Federal agencies such as the Federal Housing Administration and the Veterans Administration require smaller down payments. You will need to research the agencies and speak with a lender to determine qualification requirements and payment options.

3. Evaluate Your Budget

Take time to learn where you’re currently spending your money and if you can save more. Establishing a timeline can be helpful in determining your savings plan. Do you want to purchase a home in six months, a year or more? Reducing your spending, increasing your income or both can help you reach your down payment goal faster.

4. Pay Down Your Debts

Lenders look at how much of your monthly income is devoted to debt payments, also known as your debt-to-income ratio. In short, lenders want to know if you can pay back a loan and prefer to offer mortgages to individuals with a low debt-to-income ratio. And don’t forget, credit card debt will directly impact the size of the loan for which you qualify.

5. Calculate Your Monthly Payment

The monthly payment you make on your home is more than principal and interest. Additional costs can include escrow for property taxes, insurance, or a homeowners’ or condominium fee. Especially when trying to purchase your first home, you want to make sure the total monthly payment is feasible and you can still live comfortably. Most real estate websites offer a mortgage calculator to help you figure out the complete picture of your monthly payment amounts.

6. Get Pre-Approved

Being pre-approved for a mortgage gives you an edge over other prospective buyers when you’re ready to place a bid. This step will signal to sellers that you’re a serious buyer and your financial profile has been thoroughly vetted. Visit and research several lenders to understand what loan options are available for you.

Are you ready to call Northern Colorado home in a home of your own? We can help, call us at (970) 686-2798.


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