Ready to buy a house but not sure you can swing the down payment? You might be surprised to learn that home ownership is well within your reach—even in a booming real estate market like Colorado Springs. With various loan options and things you can start doing immediately to prepare, we’re here to share tips and advice for planning and saving to buy a home in Colorado Springs.
According to the National Association of Realtors, about 60% of all homebuyers finance their home purchase using 6% (or less) as down payment.
But regardless of your down payment, and whether you’re looking to upgrade your house or are a first-time homebuyer, careful preparation and detailed budgeting are essential when considering a move to Colorado Springs. After all, it’s one of the nation’s fastest-growing cities and hottest real estate markets.
First Things First…Do You Qualify for a VA Loan?
With six bases located within the city limits, Colorado Springs is a big military town. For many current residents, and those relocating here, a down payment may not even be required. Backed by the U.S. Department of Veteran Affairs, a VA loan offers many service members and their spouses a true no-money-down opportunity to purchase a home.
Other benefits of VA loans include no mortgage insurance, low closing costs, and more credit and income flexibility, making it easier for borrowers to qualify.
The best part? Park Avenue Properties of Colorado Springs offers a military rebate for service women and men relocating to the city.
5 Tips to Save For Your New Home
Military or not, purchasing a home is likely to be your biggest financial transaction to date. No matter your loan type, having a nice chunk of change to put down will always benefit you financially, so it’s important you enter the process fully aware and informed of both your possibilities and limitations. A mortgage is a lot to take on, so planning well in advance and saving for a few years can be a wise decision. Here are some ideas to help bolster your savings for a down payment on a home.
- Determine how much you need to save. Start by figuring out how much you can actually spend on a home. That may seem like a no-brainer, but you’d be surprised how many become awe-struck by the results of their first online home search and proceed to spam their realtor with listings. It’s no fun falling for a home you can’t afford. So, long before you even think about house hunting, meet with a mortgage lender to determine the types of loans you qualify for, what your realistic price range is, and how much of a down payment you’ll need. With this basic (but critical) information, your savings goal is established.
- Get out of debt. Refinance loans with high interest rates. Increase monthly payments if possible. Create a detailed budget to better manage your expenses. Go through credit counseling. If you carry a lot of debt, now’s the time to do whatever you can to reduce it. Not only will it be much harder to save for a house while in debt, but qualifying for a mortgage also becomes more challenging.
- Hold off on retirement savings for a bit. When saving for a home purchase, it’s best to give it all you got—at least for the short term. Especially if you’re young, it may be worthwhile to divert what you’re currently setting aside for retirement to a home down payment savings account. This could greatly impact how much you’re able to save each month, and remember, a home purchase will prove to be a very profitable investment for your future.
- Opt for the cash. Your friends and family would revel in the idea of helping you achieve your dream of home ownership (if they really love you, that is). We’re not saying set up a GoFundMe page or ask for handouts, but when your birthday, Christmas, Hanukkah, anniversary, etc., comes up and they ask what you want gift-wise, tell them money. Every little bit helps when saving up for your mortgage down payment.
- Consider a side gig. Working two jobs certainly isn’t for everyone, but if you can swing it for a brief but lucrative run, your savings will increase exponentially. With today’s healthy economy, you could have plenty of options for relatively low-stress side hustles like rideshare service, pet sitting, online delivery driver, or countless freelance opportunities depending on your schedule and your trade.
Pro tip: there’s an app for that!
Apps like Digit and Acorns are great for “saving money without thinking about it.” You can get set up to automatically save daily amounts, or round up your purchases to the nearest dollar and wiring the difference directly to your down payment savings account.
A Penny Saved…
Keeping a close eye on your spending habits before purchasing a home is huge. Track and evaluate your expenses for a couple months and see how it all balances with your income. Sometimes, making some simple adjustments in your daily routine can go a long way in helping you save up for your dream home. Here are a few things to try:
- Cool it on the fancy morning beverages. Average cup of Starbucks coffee costs $2.75. Annual savings: $1,003.75.
- Cut the cord on cable. Average cable package is $100/month. Annual savings: $1,200.
- Brown bag it. Average American worker eats out 2x/week at $11 per meal. Annual savings: $1,144.
- Dine in. Average American spends $232/month eating out. Annual savings: $2,784.
- Hoof it (or ditch the whip for public transport). Average American spends $713/month on a car. Annual savings: $8,556.
Oft-Overlooked Home Buying Expenses You Should Budget For
From a cost standpoint, there can be a lot more to buying a home than first anticipated. Your down payment, monthly payment, and total mortgage may take center stage, but don’t forget to keep these other potential expenses top-of-mind as you plan your move.
- Miscellaneous loan costs. This includes things like closing costs, inspection fees, escrow, insurance, realtor commissions, and property taxes.
- Moving expenses. Whether you hire a moving company or do it yourself, don’t neglect the cost of the move itself when budgeting.
- New furniture and upgrades. With a new space often comes a fresh start, so upgrading furniture to complement your surroundings—or buying more to fill out additional rooms—is not uncommon soon after purchasing a new home. And even if the home is move-in ready, if you have the funds for necessary upgrades or personal customizations, all the better in making it your home sweet home from the very beginning.
Ready to Make Your Move to Colorado Springs?
Be sure you enlist the help of a realtor you trust. One who’s willing to be by your side helping every step of the way…beginning with support and guidance in your budget and down payment savings plan. Then when you’re ready, your realtor should work with you in lockstep as you create your dream home wishlist, review your financial status, gather necessary documents, research lenders, begin your search, negotiate with sellers, and eventually secure the keys to your new home!
When it comes to realtors who live and breathe the Pikes Peak region, it’s hard to top Tanya Stevenson of Park Avenue Properties. As a 4th generation resident of Colorado Springs, her extensive knowledge of our beautiful city and love for the community has proven invaluable time and again to countless satisfied clients who now call Colorado Springs home.
Contact Tanya today at (719) 548-9900 or visit ParkAvenuePropertiesCO.com to get your Colorado Springs home buying process started!