Bozeman Real Estate Blog

Buying a Home in Bozeman – How to Financially Prepare

Buying a Home in Bozeman – How to Financially Prepare


Bozeman’s housing market is a tough one to get into, especially for first-time homebuyers. With higher than average housing prices and lower than average wages, Bozeman’s economic landscape makes it tough for first-time homebuyers to achieve their dream of owning a home in Bozeman.

But don’t get discouraged! It is still possible to buy a home in Bozeman, it just takes some preparation and knowledge. We just recorded a podcast with Mike McCormick, owner of McCormick Financial Advisors to discuss how you can prepare financially for buying a home in Bozeman. Listen on Spotify or iTunes.


If you prefer to read, here are a few of the tips Mike offered in our podcast episode.

 

1) Prioritize saving

With the cost of rentals as high as it is in Bozeman, it can seem daunting to find extra cash in your budget each month. To save for a down payment, Mike advises automating your savings, even if it is a small amount. While it may be tempting to go on a shopping spree, be sure to put any bonuses or cash gifts that you receive straight into your savings account. Another great tip for saving is to avoid subscription-based purchases. Look at every purchase as potentially taking money away from your goal of owning a home, eliminate as many memberships and subscriptions as you can. While they may seem like small amounts each month, all of that spending adds up quickly.

 

2) Know your credit score

The amount of money you are approved to borrow depends largely on your credit score. Know what your credit score is, and be aware of any uncollected debts that may be filed against you. There are no quick tricks to boosting your credit score aside from ensuring that all your bills are paid on time and paying any debts owed. If you need to build your credit you can start by using a credit card, just be sure to always pay the balance in full.

 

3) Avoid debt

While some debts like student loans are a necessary evil, try to eliminate or pay down as many debts as you can before purchasing a house. If you have a high debt-to-income ratio, it will affect the loan amount you are able to receive. Paying off any credit card debt and car loans will help you significantly when you go to get pre-approved for a home loan. Another tip is to avoid purchasing brand new vehicles. While they are tempting, buying a $30,000 car can leave you with a large debt and a depreciating asset. Being conservative with your vehicle purchases can leave you debt-free with more money to put towards a house.

 

4) Prepare for hidden expenses

While you may be pre-approved for a certain amount, take a serious look at your monthly budget before you go house shopping at the top of your budget. Consider all the additional expenses that come with homeownership like HOA dues, property taxes, insurance, utilities, internet, etc, and be sure to factor that into your monthly budget. Give yourself some wiggle room each month because unexpected expenses will surely pop up.


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