With rumors swirling that the Fed may continue to drop interest rates in 2024, you may be considering purchasing a home. Below are some ways you can prepare early to ensure a successful homebuying journey.

1. Know your rights.

As a homebuyer, you are protected by the Fair Housing Act, which prohibits discrimination in housing because of:

• Race or color
• National origin
• Religion
• Sex (including gender identity and sexual orientation)
• Familial status
• Disability

In addition, the Consumer Financial Protection Bureau (CFPB) offers many resources to help you understand your rights and protect yourself throughout the homebuying process.

2. Understand how much you can afford.

Before you begin looking at houses, figure out how much you might be able to afford to spend on a monthly mortgage payment and go from there. What you might afford depends on your income, credit rating, current monthly expenses, down payment, and interest rate. It’s a good idea to not only understand what comprises a mortgage—principal, interest, taxes, and insurance—but the additional expenses that may arise.

CHFA offers a budgeting tool to help you determine what you spend and how you can save, as well as mortgage calculators to help you figure out monthly costs related to certain home prices. CHFA recommends spending no more than 30% of your gross monthly income on your mortgage to maintain affordability.

3. Learn your credit score and improve it if needed.

Credit impacts the homebuying process in a multitude of ways, so raising your score may result in a savings of thousands of dollars over the life of your loan. As a Colorado resident, you can access one free credit report a year at annualcreditreport.com.

Learn how to read your credit report and ways you can improve your credit then take action while you prepare to start the homebuying search. It may take several months to raise your score, so starting early is recommended. CHFA-approved housing counseling agencies can help you understand your current credit situation and offer guidance on improvements that can increase your purchasing power.

4. Understand that buying a home involves compromises.

It is nearly impossible to find a home that “has it all,” so deciding what you are willing to compromise on is a key step in preventing buyer’s remorse. Some key questions to consider asking yourself are:

• Would you consider a fixer-upper or would you prefer a newer home that doesn’t require modifications?
• Do you mind taking care of a lawn or would you prefer a condo or townhome with a small yard?
• Are you interested in a particular school district?
• How long would it take to get to work/frequent activities?
• What home features are necessary for your comfort?

This HUD-provided homebuying wishlist offers even more questions to help you determine what matters most to you.

Don’t forget to review CHFA’s Steps to Homeownership and the Homebuyer’s Roadmap for even more helpful information.