Buying a home can seem like such an intimidating process, especially for first-time buyers. The good news however is that by taking time to research and know more about the process, you’ll be able to make well-informed decisions that will help you towards your goal of homeownership.
If you’re a first-time homebuyer who’s searching for homes for sale in Boulder, CO, here are a few helpful tips for you to keep in mind:
Save for a down payment early
While putting 20% down is common, many lenders nowadays require much less. There are even first-time home buyer programs that require as little as 3% down. Keep in mind however that putting less than 20% down can result in higher costs, as well as the need to pay for mortgage insurance.
You can try using online mortgage calculators like this one to figure out a goal amount so you can start saving up.
Look into state and local assistance programs
Colorado and other states offer assistance programs specifically for first-time homebuyers. Some of the benefits included with these programs are down payment assistance, tax credits, closing cost assistance, and discounted interest rates. You can also check your municipality or county in case they offer first-time homebuyer programs.
You can get more information on first-time homebuyer programs in Colorado here.
Find out how much you can afford
Before you start looking at listings and visiting open houses, you’ll need to know what your price range is. You can ask your real estate agent for assistance, or you can use online affordability calculators like this one so you can get an initial idea.
Review your credit
Your credit will play an important role when you’re trying to apply for a mortgage loan. It will also determine the interest rate you get, and sometimes the loan terms.
After checking your credit, search for and dispute any possible errors that could be lowering your score. Look for ways to improve your score, such as paying off any outstanding debts you may have.
To maintain your score after applying for a mortgage, do not open any new credit accounts such as an auto loan or credit card account until you’ve closed your home loan.
Getting pre-qualified for a mortgage will give you an estimate of the amount a lender is willing to lend based on your current income and any outstanding debts you may have.
During the later parts of the home buying process however, getting a preapproval letter is a smarter move, as it tells sellers that you’re a serious buyer, giving you an advantage over other buyers who aren’t preapproved. In order to get preapproved, a lender will conduct a thorough examination of your finances before putting into writing how much they’ll be willing to lend you and under what terms.
Stay within your budget
A good home buying strategy is to target homes that fall under the amount you were approved for. While you might afford a home priced equal to your approval amount, keep in mind that it does not account for the monthly expenses or potential problems you’ll have to deal with as a homeowner, like faulty plumbing or malfunctioning appliances. Sticking to a firm budget will also help you when it’s time for you to place an offer.