Colorado Buyers Information

When is the best time to buy a home? Some home buyers try to time their purchase to the market cycles. However, the real estate market is not necessarily synchronized with the stock market or with the overall economy.

Interest rates are higher when the economy is healthy and consequently, that is the time when fewer people can afford to purchase a home. Interest rates fall when the economy is down and that is the time when more people are actually able to afford a home purchase.

Consequently, real estate experts cannot predict the best time to buy a home since an important factor is also the consumer outlook for the future which additionally includes the job market. Are salaries high or low and how secure is employment? What many of the experts agree upon is the “buy and hold” strategy – which translates into “buy a home you expect to live in for at least seven years or more”.

When you are planning to buy a home, this is not the time to make any major purchases such as furniture or a new car. “Stability” is one of the keywords here and unless you are offered a new job with a substantial salary increase, this is not the time to make a change. Lenders run a check on your finances for the past two years and it is best if they see an increase in income. Additionally, if you are planning to quit your job to join the ranks of the self employed, this is not the time to make that change.

About Mortgages

Mortgage payments consist of the following:

• Principal: This is repayment of the original amount of money you repay on a monthly basis.
• Interest: This is repayment of the cost of borrowing the original amount of money which you repay on a monthly basis.
• Taxes: You pay real estate taxes each month to your local government.
• Insurance: Homeowners insurance which is required on your home. In addition, mortgage insurance is required to protect the lending company.
• PITI (Principal/Interest/Taxes/Insurance) – This is the total monthly mortgage payment you make each month.

How Much Down Payment Will We Need to Make?

Home buyers who are purchasing their home thru the Veterans Administration (VA) are usually not required to make any down payment. However, if is important to remember that the less money you put down on your home purchase, the higher your monthly mortgage payment will be. If this house is not your primary residence and you will be living elsewhere, a down payment of 20% is required. For all other situations, the down payment usually falls within 5 to 15% of the home price.

You should also be aware that closing costs, which normally cost from 2 to 5% of the amount of the home, must be paid in cash at the closing.