Learning about the home buying process is the smartest thing you can do before you begin your home buying journey in Colorado. Buying a home is exciting, emotional, time consuming and even a little bit challenging. Use this guide as a basic outline to get you through the steps for purchasing your first home.
Basic Requirements of Your First Home
- Before you begin the home buying process, check your credit rating at all three of the major credit bureaus. To qualify for a home loan, you’ll need good credit.
- After establishing you have good credit, make up a list of the desired features you want in your first home. Use this list as an example to give you some ideas.
- Location. Make sure the neighborhoods you’re looking at offer a comfortable commuting time to work that you can live with. Do you want or need to live close to family or friends?
- Public transportation. Is nearby public transportation a requirement for your new home?
- Land. If you’re into gardening, landscaping or just want some acreage for privacy, be sure to take that into consideration when home shopping.
- Property taxes. If you plan to spend any length of time in your new home, make sure the property taxes are reasonable and affordable to you.
- Gas versus electric. Determine whether you prefer gas or electric before shopping for homes.
- Repairs. Are you handy with tools? Would you be interested in a home that needs repairs (fixer upper)?
- Fencing. Do you need a home that already has backyard fencing in place to keep pets or children contained? Would you be willing to put your own fencing in after buying the home?
- Number of bedrooms and bathrooms. If you’re a young couple planning a family in the future, make sure you’re realistic on the size of the home you’ll need.
- Other options. Do you want or need a large kitchen, panty, dining room, living room or home office? Is a garage or garden a priority?
Typically, your total mortgage payment will include principal, interest, taxes and insurance. It’s a good idea to get prequalified with a loan officer before looking at homes.
Monthly payments should not exceed about 25-33 percent of your monthly gross income. Regardless of the amount, you’re approved for; make sure you’re comfortable with the monthly payments!
It’s highly advisable to use an experienced real estate agent to find your first home. Agents know the market, neighborhoods, home prices and are skilled at finding homes to meet your requirements.
Making an Offer
- Discuss what similar homes in the neighborhood are selling for with your real estate agent to determine your offer.
- Specify in the contract what items in the house are included with the sale such as lights, blinds, curtains, appliances, fans, etc.
- Consider asking for a home warranty provided by the seller. This is a nice option on older homes to ensure older appliances and cooling and heating systems will be repaired.
Apply to a lender for a home loan, and be prepared to bring several financial documents when filling out the application.
You’ll discuss a variety of different types of home loans, points, interest rates, down payments and closing costs.
Ordering a Home Inspection
A home inspection is not a requirement when purchasing a home. However, hiring a professional home inspector to check over the heating, cooling, plumbing, electrical systems and other miscellaneous items is a good idea.
- Your lender will order and review the appraisal on the home you’re purchasing. Appraisals should come in at or above the contract price of the home.
- Research and purchase homeowners insurance. Homes carrying a loan must be covered with suitable home insurance.
- Arrange to view the home right before closing. Check that everything is in good working order.
- Review closing documents on the house.
- Provide evidence of your homeowners insurance policy.
- Lock in the interest rate.
- Pay the closing costs, and pick up the keys to your new home.
Inventory is very low in the Metro Denver and Aurora area, which means that the competition to purchase is high. There are some things that we can do in advance to make sure that your offer looks great to the seller.