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2016-12-07 11:59:17
Five Steps to Go From Renter to Home Owner

Five Steps to Go From Renter to Home Owner

Denver's real estate market is booming, and for those thinking about getting out of the rental market and entering the home buying world, the prices can seem daunting.

As of November 2016, the average rent for a one-bedroom apartment in Denver is $1,300, and a two-bedroom is close to $1,700. As a renter, you are giving that money directly to your landlord every month, building zero equity for your future. How can you turn that around and make your money work for you in today's real estate market?

Here are five factors that will get you going in the right direction:

1.  Prepare an honest budget. Take a true look at your finances, assessing everything from monthly expenses, credit cards, car and student loans, and savings. Take intentional time to look at what you spend each month and determine your overall financial status.

2.  Determine what you can afford in a monthly mortgage payment. A lot has been written about what percentage should be spent on your monthly mortgage. Some say 25% of your annual net income, others up to 35% of your gross income, while others say your mortgage payment should equal one week's paycheck. At the end of the day, you have to be able to afford where you live. Determine what that number is for you.

3.  Determine the amount of your down payment. The higher your down payment, the lower your mortgage. However, don't let a lack of funds deter you from investigating your options. A typical down payment for a 30-year fixed rate conventional loan is 5-20% of the sale price of the home. Other loan options that require a lower down payment include FHA, VA and USDA loans, each with their own eligibility and qualifying requirements. 

4.  Find a great mortgage lender.  Ask your realtor, friends at work, family members, and others you trust this question: who would you use and why? Finding a mortgage broker that is qualified, professional, and has an excellent track record is critical to your home buying experience, as that person will walk you through the home loan process from beginning to end. A great mortgage lender will answer your questions, get you pre-qualified, provide a check-list for the mounds of paperwork it will require, and ensure that your home loan closes correctly and on-time. 

5.  Work on your credit score. Nothing can kill a home loan like bad credit. Ensuring your credit is good will provide the best starting point in qualifying for a home loan. A higher credit score will allow for better interest rates which will lower your monthly payments. If your credit score is in trouble, take the necessary steps required to raise it by making your monthly payments on time and paying off your credit cards and other debt. 

More questions? Looking for a great mortgage lender? Click here to contact us to ensure you are working with the best professionals in Denver!

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