Before you can even consider buying a home, you need to be prepared to get your credit report and your credit score. Even though you can get your credit report for free once a year, it’s still best to talk to a lender about your options.
You can easily have your credit run and get a pre-approval for a mortgage by contacting your favorite lender or talking to your Realtor about a lender they recommend.
For your home mortgage, there are more costs than you may think besides the interest rate and paying back the money. First, you need to factor in the down payment that you will be putting down for your Fort Collins home. Most financial experts agree that a 20% down payment, which is 20% of the total cost of the home, is a good figure to attempt to reach because it eliminates the need for private mortgage insurance.
If you are unable to put down at least this 20% figure, than you most likely will have to pay an additional fee each month for the private mortgage insurance. PMI, for short, protects the lender in the case that you were to default on your mortgage.
Besides these required costs associated with your home loan, you may also want to decide if loan origination and points can benefit you in the long run with your payments. Your lender may offer you the ability to pay up front for special points which allow you to get a decreased interest rate. These points can cost you thousands of dollars, however, they typically decrease your loan interest rate by 1/8 of a percent per point It’s important to do the math on these points because if you plan on taking longer than 6 years to pay back the mortgage, you may actually save money in interest by buying these points ahead of time.
Before you decide to spend hundreds of thousands of dollars for a new home in Fort Collins, you will want to make sure you are investing in a sound property. You will want to spend around $300 – $500 dollars for a certified, qualified, and trusted home inspector and other experts to survey and inspect the home. This way, you will know what you are buying and know whether you need to adjust prices based on repairs that need to be done. This is even more important in homes that are being purchased from a foreclosure because the original homeowner is not present to give you details on the home.
A last cost you may not know about is the appraisal fee. You will be paying around $300 – $500 for the appraisal of the home. Although this seems like a high cost, you will directly benefit from it. Based on your appraisal, your lender will not give you financing for anything over the appraisal cost. This way, you will know you will be paying for a fair, estimated value, rather than an inflated price.
The costs above are not all the costs associated with buying your home. It is important to discuss with your realtor all costs you will encounter during your home to avoid any possible hidden fees before you go to the closing table.