If you’re a first-time home buyer in Colorado Springs, then chances are you know how overwhelming the home-buying process is. You know without being told that you must overcome a number of obstacles before you get the keys to your new front door. You also know that you don’t know where to start.

In order to help you navigate the home-buying process, we’ve organized the following short guide to get you started. These tips for first time home buyers fall into three categories:

-Your housing requirements
-Your financial situation
-Working with your real estate professional

1. Look at Your Housing Requirements

When it comes to finding the right home, first-time home buyers in Colorado Springs should consider the following.

A. What Type of Home Suits Your Life?

To a large extent, where you are in life determines the type of living arrangements you need. If you live as a single person, then a studio or one-bedroom co-op apartment in the downtown area might fit you perfectly. If you’re married with small kids, then you may gravitate toward a three-bedroom condo or a single-family home. Maybe you and your spouse work are professionals who work at home, in which case a townhouse might work best for you.

Although many real estate professionals will tell you to start saving up your money before you do anything, it’s difficult to know how much money you need to save if you don’t know what kind of home you require. We’re aren’t against you saving up money. We just want you to have a goal to aim for. As financial guru Dave Ramsey says, you need to have a clear goal when you’re saving for a house.

B. What Features/ Amenities Do You Require?

If you think like many first-time home buyers, then it’s likely that the home of your dreams may not match the reality you end up with. For example, you may have dreamed of having a pool in the backyard. However, you may not get one, either because of budget or availability.

That’s why you’ll benefit from making a list of nice-to-have options and must-have options. How do you know what those are, given the fact that your desires may cloud your thinking? Start with the exercise above: Know what kind of home you need.

For example, on the one hand, you may know that you need a three-bedroom home. On the other hand, you may want to have a pool or a completely updated kitchen, but barring health requirements for such amenities, you may have to do without these features. It’s likely that your budget and the mortgage you qualify for will play a big role in this.

2. Assess Your Whole Financial Situation

After you’ve completed the steps above, you’re ready to take the next steps on your path to becoming a first time home buyer in Colorado Springs.

A. Determine What You Can Afford

At this point in the process, you can probably start window shopping for a home on real estate sites. This will give you some idea of what homes in your area cost and how much you’ll be able to afford.

Many real estate websites allow you to sort the listings by price, number of bedrooms, area of town and more. Because you’ve taken the time to think about what you need, you’ll likely have an easier time with your home search.

B. Set Up a Budget

Although this section point is point B in this list, you can and should really look at it tandem with point A above. The sticker prices of your home counts as only one number in this equation. How much money you bring in each month and more importantly, how much money you have free after you’ve paid all your bills makes up the other side of the equation.Once you have these numbers, set up your monthly budget.

C. Do Any Credit Clean Up Required

Your credit score plays another key role in the home-buying process. If you have lousy credit, now is the time to start cleaning it up. Pay off your debts in rapid order if possible. If you can’t pay them off completely, at least pay them down and get your bills caught up if they’re behind.

D. Save for the Down Payment

If you’re like most new home buyers, then you’ll start saving up for your new home long before you contact a real estate agent in Colorado Springs. The key takeaways you should get from your budgeting efforts are how much debt you have (and have to pay down) and how much money you have left over to put into savings. 

Some home buyers try to pay down all of their debt before trying to spring for a house. Others will pay down their debt enough so that their credit rating is good, but then they’ll put the rest of their extra money into savings. Those who want to save money even faster may wind up moonlighting at a local coffee shop or picking up some gig work.

Whatever route you go, make sure that you put savings into your budget so that you know how much you need to sock away each month.

3. Working With Your Real Estate Professional

Eventually the time will come for you to work with a real estate agent. Once you’ve hired one to help you, you’ll want to think about the following.

A. Look for Financing Options

There are a number of financing options for the first-time home buyer in Colorado Springs. You may first want to look at some funding sources closer to home, like your IRA. First-time home buyers can borrow against their IRA without the fear of early withdrawal fees if they meet certain guidelines.The HUD program offers home buyers another funding option, as do many state-based home-buying programs. Each offers something slightly different in terms of amenities. It’s best to talk to your real estate agent about these and other options. They often know people in the financial industry. As such, they can connect you with better home financing options than you would have if you just searched for them on your own.

Other great financing options include the FHA, USDA and VA loans. The percentage rate on these range from 0% to 3.5%, give or take. Talk to your real estate agent to learn more.

B. Get Pre-Approved for a Loan

Before you go house hunting, you’ll want to get pre-approved for a home mortgage. This gives you some clout when it comes to making an offer on a home. That is to say, if you know how much money you’ll qualify for, you’ll know how much you can offer and have your offer be most likely accepted. It also prevents you from setting your sights on the Shangri La home instead of the one that fits your budget.

Final Steps

If you’ve followed the tips above, then you and your real estate agent should be ready to go home shopping. Although we’ve provided you with three main areas to think about, it’s likely that you’ll encounter things you didn’t expect. That’s part of the home-buying process, too and why it helps to have a real estate professional helping you along the way.

If you’re a first time home buyer in Colorado Springs, we’d love to chat with you about buying your first home.