Depending on your needs, it is up to you whether to buy or rent a home in Colorado. But why would you consider Colorado housing? Since there are top we buy houses companies in the state, why prefer renting if you can invest in something that can increase your wealth? Of course, before you commit to buying a home, there are many factors to consider. But with these four tips, you can feel prepared for an easy Colorado home buying experience.
Secure a Healthy Credit Score
A good credit score does not necessarily mean that you will be approved for a mortgage. However, it is important to remember that the better your credit score, the better your terms and interest rates will be. Why? First, higher scores are an indication that you have managed your debts well in the past. And secondly, low scores indicate poor financial decisions and could make it difficult to repay a loan.
If you are classified as high risk, you can expect to pay a higher interest rate or even be turned down for a mortgage. You should improve your credit score before buying a home.
Don’t Pay a Large Down Payment
Taking out a mortgage and making a down payment are the biggest upfront costs. First of all, do you need a 20% down payment? No! The FHA (Federal Housing Administration) loans require a 3.5% down payment. Fannie Mae HomeReady Loans and Freddie Mac Home Possibility Loans allow a 3% down payment. If this cost is too high for you, find out about programs that allow you to buy a home for a fraction of the price. Qualified buyers may be required to make a down payment of $1,000 or less.
Colorado Housing and Finance Authority (CHFA) loans can get you into a home for as little as $1,000 less, as long as your income, credit score, and debt-to-income (DTI) ratio fall within CHFA guidelines. If you qualify, you may also be eligible for closing cost assistance. The Chenoa Fund is a down payment assistance program that can be used with FHA loans or HomeReady loans to help you figure out what options are available to you.
Think of Mortgage Pre-Approval
Once you’re sure you can afford the down payment, you need to know how much money you have available for the monthly mortgage payment. You can do this in several ways. Start with the mortgage pre-approval process. After your finances have been reviewed by a loan officer, you can get a pre-approval letter indicating the amount you have available. This letter is valid for up to 90 days, depending on the lender you have.
You can use it when you are looking for homes. Pre-approval letters are a good way to help sellers feel confident about writing a contract. They are a great way to help home buyers stand out from the competition. A mortgage calculator may be a better option if you have less than a year left. To find out how much you can afford to buy a new home, you’ll need to enter your monthly budget and down payment amount.
Follow Your Real Estate Agent
Remember to answer your real estate agent’s calls. Homes go on the market as soon as they are advertised. There are more listings on the market in 2018 than in five years. It has helped increase inventory for buyers and give them more options. More than 68,000 Colorado homes for sale were since in 2018. As such, decide where your home will be. Colorado has many great communities. It is essential to make “home” your top priority. It is critical for those looking in Denver, where it can be frustrating to commute.
And lastly, subscribe to a notification list. It can be a simple automated email that your agent sends you to let you know about properties in your neighborhood.