2020 has been a rocky one for Coloradans but one bright spot are the record-low interest rates for homebuyers. Owning a home yields many benefits. Not only will you enjoy the pride of homeownership, real estate appreciates in value and there are tax incentives available. For most people, a home is the biggest purchase of their lifetime. If you’re ready and willing to become a homeowner this year, the following tips will help you confidently purchase the best Northern Colorado home for you.
Evaluate your Finances
One of the first steps is knowing your credit score. Knowing your credit score helps determine the interest rate and associated costs you pay on a mortgage loan. In general, the higher your credit score, the lower the interest rate you’ll qualify for.
You’ll also need to research how much house you can afford. Talking to a qualified lender can help you determine your price range. Another key step when you are crunching the numbers is to set a down payment goal. The myth remains that you must put down 20% to move forward with your purchase. There are options for homeowners available to put down less, such as a Federal Housing Administration loan.
Assess Your Needs
If you’re firm in your decision to buy a home this year, it’s likely because you have a specific reason. Maybe it’s the interest rates, you need bigger space or want to move to a school district that fits your family’s needs. Recognizing the “why” helps you create a “must haves” list. Making a list what your new home needs saves you time when you’re ready to start looking. Your next home might not meet every single item on your priority list, so you must decide on what factors you can compromise on and how you can realistically stay within your budget.
Set a Budget
Don’t set your budget based on your maximum loan approval amount. As the buyer, you’re the best judge of what you can realistically afford. A good rule of thumb is that your total monthly home expenses should not exceed more than one-third of your gross monthly income. Homebuying expenses are not limited to your down payment. Do not forget to determine how much you need to cover loan fees and closing costs.
Sell Your Current Home
If buying your home this year is contingent upon selling your home, you need to be prepared if the timing doesn’t align perfectly. Another consideration is to make sure you have sufficient funds on hand if you are unable to have concurrent home closings. A real estate agent can help you navigate the transitions.
A buyer or seller market makes a difference timing the transaction and a real estate agent and NoCo HBA can help shed light on local market factors. Give NoCo HBA a call, at (970) 686-2798, to learn more about homeownership opportunities in the Northern Colorado area.