Taking the First Steps in Home Buying
Home ownership is one of many milestones many people hope to achieve at some point in their life. As with anything, there's a first time for everyone - and that may mean many questions to ask and many learning curves to experience. Let's face it, buying a home isn't as simple as finding the one you love, and moving in. There are many moving pieces that many first-time buyers may not consider when they begin their journey. By sitting down with a trusted advisor, such as a reputable lender or Realtor, they can guide you on what is financially necessary. Here are just a few questions that may arise in your first steps of buying a home.
What if I Don't Have the Down Payment?
A big financial hold up for many first-time buyers is coming up with the down payment requirement. Not everyone has 20% of the purchase cost of a home just sitting in a savings account for these kinds of occasions. And that's ok. Setup a plan for how you will obtain that financial goal so you can feel comfortable with your down payment. It may take a year or more to get financially ready, but taking that time to solidify your financial status will allow you to be better prepared for buying a home.
What Credit Score Do I Need?
A good base line is about 620 for a credit score. Again, talk to a knowledgeable lender, but most will tell you 620 is a good starting point. Looking at prices of homes, about $6 for every $1000 determines your payment. So if you go up $10,000 in purchase price, it raises your payment by about $60/month. Now, there are programs and grants that assist buyers with less than ideal credit scores in obtaining funding for the purchase of a home. By speaking with a lender, you can quickly determine what is available to you for funding options.
Are Points Really that Important to Consider?
For every 1/8th of a point, that just changed your payment by about $12/month. The last thing to think about is how far out you want to look, because if interest rates are climbing and it goes up from a 1/2 point to a full point, that changes your qualification level by anywhere from $18-25,000. So that's why as interest rates go up, you might sometimes see the prices come down, because it's affecting that piece of the financial puzzle.
Do I Need to Cover Closing Costs?
As a buyer, you will have closing costs you'll need to come to the closing table with. Closing costs can include, but is not limited to, application fees, appraisal cost, escrow fees, credit report fee, home owner's insurance, title insurance, and more. Typically, a buyer can expect to pay anywhere from 2 to 5 percent of the purchase price in closing costs. On average, buyers pay roughly $3,700 in closing fees, according to a recent survey.
Those are just a few things to think about when taking the first steps in the home buying process. Financing your first home can be a stressful experience. But with the right Realtor in your corner, your future holds the keys to your dream home. We can provide guidance on finding the right lender to assist in your financial needs, and we can help you find a home within your budget that meets your needs. When you buy a home in Colorado Springs, we know that it’s going to be a huge step for you, but well worth it in the long run. There’s nothing quite like investing in something that belongs to you. Visit our website to learn more about buying a home with our Colorado Springs real estate team!
Colorado Springs Real Estate Agent
The MacGuire Team
6760 Corporate Dr
Colorado Springs, CO 80919
719-536-4324 or 719-660-6793