For many people, owning a home is seen as a rite of passage. It’s part of the “American Dream.” But at the same time, purchasing a home is expensive. As a result, many people end up renting for an extended period of time. This is especially true in many city centers across Colorado where home prices are far more expensive than the average state- or nation-wide.
But at some point, you may be ready to finally make the switch. Here are a few signs that someone is ready to stop renting and purchase a home.
1. Rental Prices Keep Going Up in Colorado
Year after year, rental prices are going to keep going up in CO. While the rental company is going to claim that these increases are consistent with the industry, sometimes they’re higher than they need to be. You may be renting in an effort to make your living arrangements more affordable, but if rents are increasing so high that they’re even more than what you may pay in mortgage payments, it might be time to make a change.
As a result, those who are tired of their rent being increased should think about buying property instead. As said, you might actually be spending a little less in mortgage payments compared to rent. And even if you’re not, the reward of actually owning real estate and home equity may be well-worth the effort needed to go from renting to owning.
2. Your Credit Score Has Gone Up
Your credit score plays a major role in the mortgage approval process. While your income and debt load also play a role in your ability to secure a mortgage, your credit score will tell your lender what kind of a risk you may be. If your score has been on the lower end of the spectrum, you may have been renting because getting approved with a lower score was difficult.
But if your credit score has improved over the recent past, you may be qualified to secure a mortgage in CO at a decent interest rate. If that’s the case, you may want to consider applying for a mortgage today. With a good score, you may be able to get a lower rate to help you save month over the life of your loan.
3. Debt Management Is Second Nature
Anyone who takes out a mortgage should be able to budget accordingly. Mortgage payments will take out a big chunk of your income, so you will need to be able to balance your budget and manage your finances appropriately.
You’ll likely have many other debts on your plate, such as a car loan, student loan, personal loan, and so forth. And a mortgage is just another type of debt that needs to be managed properly. If you are very good at budgeting, then perhaps you’re ready to handle a mortgage.
4. You Have a Liquidity Fund In Place
The cost of owning a home extends far beyond the mortgage. If you are thinking about owning property in Colorado, you’re going to have to have money set aside to cover additional costs. These include repairs, maintenance, and homeowners’ insurance.
5. You Have Money For A Down Payment
A down payment is essential when it comes to buying a home. And this can be a huge chunk of money that you will need to be able to provide upfront when you take out a mortgage. Keep in mind, however, that a down payment will go towards the purchase price of the home. That said, it’s still a lot of money to come up with.
Depending on the type of mortgage you take out, the cost of the home, and your financial situation, the down payment amount can range quite a bit. But unless you’re applying for a VA loan, you will need to come up with at least 3.5% down payment (for an FHA loan). This can translate into tens or even hundreds of thousands of dollars.
But if you have managed to save this money, perhaps you are ready to apply for a mortgage and start the homeownership journey.
6. You’re Ready To Settle Down
If you are thinking of buying a home, you may want to stick around for extended period of time. When you rent, you have more flexibility to pick up and move. But when you own, selling is a much more involved process.
That said, if you’re ready to plant some roots and settle down in a particular spot in Colorado – whether it’s Denver, Colorado Springs, Boulder, or elsewhere – then maybe buying is a good idea for you.
7. A Major Life Change Is Happening
Many people elect to buy a home after a major life change. This might come in the form of marriage, a job change, or a different phase of life. These major life changes can trigger someone to settle down and buy a home.
8. Your Vision Of The Future Is Clear
Those who know where their life is headed in the near future are in a great position to buy a home. If the future is clear, you are ready for the responsibilities of homeownership.
If you are in the market for a new home or interested in refinancing your current property, be sure to contact your trusted home mortgage professional to discuss financing options.
Is it Time to Apply For a Mortgage in Colorado?
If you’re ready to buy a home in CO and have questions about mortgages, Sammamish Mortgage can help. We are a local mortgage company based in Bellevue, Washington that serves the entire state, as well as the broader Pacific Northwest, and has been doing so since 1992. Our mortgage experts will help you choose which one of our mortgage programs is right for you. Contact us today with any queries you have about mortgages in CO.