Trisha Easton - Keller Williams Montana Realty - 406.581.9643

Buying a Home—Step 1: Get Started

Home / Buying a Home—Step 1: Get Started

HOW DO I KNOW IF I'M READY TO BUY A HOME?
Ask yourself these questions:

  • Do I have a steady source of income (usually a job)? Have I been employed on a regular basis for the last 2-3 years? Is my current income reliable?
  • Do I have a good record of paying my bills?
  • Do I have few outstanding long-term debts, like car payments?
  • Do I have money saved for a down payment?
  • Do I have the ability to pay a mortgage every month, plus additional costs?

If you can answer "yes" to these questions, you are probably ready to buy your Bozeman home.


HOW DO I BEGIN THE PROCESS OF BUYING A HOME?
Start by thinking about your situation. Are you ready to buy a home? How much can you afford in a monthly mortgage payment? How much space do you need? What areas of Bozeman do you like? After you answer these questions, make a "To Do" list and start doing casual research. Talk to friends and family, drive through Bozeman neighborhoods, and use our Multi-Listing Home Search to locate Bozeman, Montana real estate.


HOW DOES PURCHASING A HOME COMPARE WITH RENTING?
The two don't really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, or protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.

Owning a Bozeman home has many benefits. When you make a mortgage payment, you are building equity. And that's an investment. Owning a Bozeman home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities—like insurance, real estate taxes, and upkeep—which can be substantial. But given the freedom, stability, and security of owning your own home, it's worth it.


HOW DOES MY LENDER DECIDE THE MAXIMUM LOAN AMOUNT THAT I CAN AFFORD?
Your lender considers your debt-to-income ratio, which is a comparison of your gross (pre-tax) income to housing and non-housing expenses. Non-housing expenses include such long-term debts as car or student loan payments, alimony, or child support. According to the FHA, monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc., when determining your maximum loan amount.


HOW CAN I DETERMINE MY HOUSING NEEDS BEFORE I BEGIN MY SEARCH?
Your home should fit the way you live, with spaces and features that appeal to your entire family. Before you begin looking at Bozeman real estate, make a list of your priorities—things like location and size. Should the house be close to certain schools? Your job? How large should the house be? What type of lot do you prefer? What kinds of amenities are you looking for? Establish a set of minimum requirements and a "wish list." Minimum requirements are things that a house must have for you to consider it, while a "wish list" covers things that you'd like to have but aren't essential.

QUICK CALCULATION EXERCISE
Gross Annual Income Gross Monthly Income 29% Available for Housing
$15,000 $1,250 $363
$20,000 $1,667 $483
$25,000 $2,083 $604
$30,000 $2,500 $725
$35,000 $2,917 $846
$40,000 $3,333 $967
$45,000 $3,750 $1,088
$50,000 $4,167 $1,208