Get your finances in order before looking for a home

If you would like to buy a home in the near future, take this steps to ensure your best possible financial position. Doing so will help you secure a lender for your mortgage and also budget for the new costs associated with buying and maintaining a home.

  • Track your expenses. Do you know how much you spend on housing, food, gas, transportation and extras each month? If you don’t now is the time to track your expenses. Keep a log of what you spend by category for a month or two to get a better idea of where your money is going. You can also review your bank accounts for the past six months to account for unexpected expenses like medical bills or car repairs.
  • Develop a budget. Once you know how and where you spend your money, identify areas where you can tighten your budget. Cutting costs on groceries or extras, for example, will allow you more flexibility to manage a mortgage payment in the future.
  • Pay off debt. Lenders like to see debt that is about one-third of your income or less. If you can pay off a credit card, car loan or student loan, it can help your position when seeking a mortgage lender. (Note that a history of paying down and paying off debt helps your application. If you have no credit history, open a credit card account and pay off the balance each month.)
  • Pay yourself first. If buying a home is high priority, then dedicate a certain amount of your income each month to a down-payment fund. A 20 percent down payment is common (although there are options for first-time homebuyers to start with a smaller down payment), so use that as your goal.
  • Stay employed. Before applying for a mortgage loan, it is best not to change jobs or quit your job. If you have been in your current job for less than two years, it could translate into a higher interest rate on your loan.
  • Pay your bills on time. It should go without saying that lenders want to see a history of on-time payments. Pay your rent, credit card bills, utilities and other bills on time every time. That good habit will help keep your credit score in good shape.
  • Check your credit. You are entitled to a free credit report each year, and it is a good idea to order one when you are thinking of buying a home. If there are mistakes on your report, work to get them removed prior to applying for a loan.

To learn more about buying a home in Steamboat Springs, contact us today using the form below. We will put our nearly 30 years of experience to work for you.