What to Expect When You Are Buying
We are in the
strongest housing market in a decade. – Be prepared for a competitive buyers
market, if you a prepared financially and willing to act quickly you will be
ready to find your dream home.
Saving for a
down payment – Colorado has a variety of down payment assistance programs for
qualified buyers. Speak with your lender on the variety of down payment options
from 0%-20% down payments. Keep in mind even if you qualify for $0 down payment
you will need money for your home inspection, closing costs, and moving
affordability- take the time to do the math on your debt to income ratio. Make
sure you account for all your expenses. If this is your first home, you have to
factor in your utility bills, home owners insurance, mortgage insurance,
commuting cost to work, maintenance costs to update and maintain your home.
credit- request your credit report from the 3 major providers. Dispute any
items that are not valid. If you have any blemishes on your report get those
cleaned up. Traditionally the higher your credit score the better interest
Get pre-approved – find a lender who is
competitive with rates, knowledgeable on current loan programs, and can offer a
guarantee you will close on time. Your pre-approval with set your maximum
budget for your new home.
Hire a real
estate agent – find an agent who understands you and the home market you are
shopping in. Working with an agent offers many advantages in this competitive
market including knowledge, faster access to new listings, stronger negotiating
power, and legal representation.
Find a home,
Make an offer – make your self a guideline of deal breaker items that a home
absolutely has to have and a list of compromises that are items you would
prefer but you can live with out. If you know these ahead of time you will be
able to sort through fresh listings and see homes that are strong contenders.
Order a home inspection – The buyer pays
for this inspection so account for this expense, depending on the house size
and the depth of the inspection budget $350 -$1000. If there are any major
issues discovered in this inspection these repairs can be negotiated with the
appraisal – this is a 3
rd part licensed real estate appraiser that
will provide an opinion of value to your lender. Depending on the type of loan
and how busy the market is, this process could take weeks.
Submit loan to your
lender – once the home is appraised, your loan goes to underwriting. Typically
this process will require a few ‘conditions’ which are additional documents
requested to complete the application process.
Shop for home owners insurance – also
know as hazard insurance, you should take the time to shop around for the best
rate. Typically when you use the same provider for you auto coverage you can
get a package deal that can be more competitive than getting separate policies.
Receive your approval from you lender- after any
conditions are resolved, the loan is now ‘clear to close’
Close on your home- make sure your lender
has been clear on the closing costs you need to bring to the closing table. Be
ready to sign all the required documents and disclosures.
Moving costs –
make sure you have accounted for all your moving costs and utility transfer
fees if that applies. If you have an HOA be prepared for that due date.