3 Things to Know Before Buying a Home

Buying a home is incredibly exciting. But it’s also one of the biggest financial decisions most people will ever make. Between scrolling listings, touring open houses, and imagining where your couch might go, it’s easy to jump straight into the fun part and figure the details out later.

However, the smartest homebuying journeys usually start before the first showing.

At Red Rocks Credit Union, we believe buying a home shouldn’t feel overwhelming or rushed. It should feel informed. So before you start booking showings or refreshing listing apps, here are three things to understand first.

Know Your Budget Before You Fall in Love With a House

A lot of people fall in love with a home based on photos alone. The kitchen looks perfect, the backyard feels just right, and suddenly you’re picturing yourself living there. But before you get too attached, it’s important to know what fits comfortably within your budget.

That’s where getting preapproved comes in.

A mortgage preapproval gives you a clear idea of how much you may qualify to borrow, so you can focus your search on homes that are in your financial comfort zone. It also shows sellers that you’re a serious buyer, which can strengthen your offer when you’re ready to make one.

Just as important, preapproval doesn’t lock you in. If you don’t find a home you love, you can simply cancel the preapproval application at no cost. Think of it as a planning tool, rather than a big commitment.

As you review numbers, remember: what you qualify for and what you’re comfortable paying each month aren’t always the same. A mortgage payment typically includes more than just principal and interest. You’ll also want to consider property taxes, homeowners insurance, utilities, and ongoing maintenance.

The goal isn’t to stretch your budget to the max. It’s to choose a monthly payment that still leaves room for your everyday life, savings goals, and the unexpected.

Pro Tip From RRCU: Start by deciding what monthly payment feels realistic for you, then work backward. Knowing your comfort zone makes the rest of the home search much clearer.

You Don’t Need to Put 20% Down

One of the most common myths about buying a home is that you need to put 20% down. For many buyers, that belief alone can delay homeownership by years.

The reality? You may not need nearly that much.

While putting 20% down can help you avoid private mortgage insurance (PMI) and lower your loan amount, it’s not a requirement for most loan programs. For example, with an FHA loan, you can put down as little as 3.5%. There are also other options that allow for lower down payments, depending on your situation and qualifications.

The right down payment depends on your goals and timeline. Some buyers choose to put less down so they can keep more money in savings for moving costs, furniture, or an emergency fund. Others prefer to put more down to lower their monthly payment.

The key is knowing that 20% isn’t the starting line. There are flexible options designed to help more people step into homeownership sooner, without having to wait until they’ve saved a large lump sum.

Pro Tip From RRCU: Talk through your down payment options early in the process. Understanding what’s possible can help you set realistic savings goals, and you may find you’re closer than you think.

Market Conditions Matter

The market you’re buying in can make all the difference in your home search.

Right now, many parts of the U.S. have more homes for sale than buyers. That dynamic creates what real estate agents call a buyer’s market. In a buyer’s market, you may have more options to choose from and less competition on offers.

That doesn’t mean every neighborhood is the same (real estate is local), but it does mean it’s worth paying attention to current trends instead of assuming demand is always higher than supply. Knowing the state of the market where you’re shopping can help you:

— Set realistic expectations on price ranges
— Understand how quickly homes are selling
— Negotiate with confidence
— Decide when to act and when to wait

Pro Tip From RRCU: Take a look at recent sale prices and average days on market in the areas you’re interested in. That snapshot can give you a sense of what type of market you’re in and help you plan your strategy accordingly.

Preparation Creates Confidence

Buying a home is a big step, but it doesn’t have to feel overwhelming. When you understand your budget and know your down payment options, the entire process becomes clearer (and a lot less stressful!).

Preparation is about giving yourself the information you need so when the right home comes along, you’re ready. You’ll know what you can afford and how to move forward without second-guessing every step.

At Red Rocks Credit Union, we’re here to help you prepare, even if you’re just starting to explore the idea of buying. Our mortgage team can walk you through the process and answer your questions along the way.

We’re ready when you are!