Buying a house in Colorado can feel like a cumbersome process, requiring a lot of time and effort. But the home buying process doesn’t have to be like pulling teeth.
In fact, the process can be quite manageable when you have the right plan in place. Here are 8 easy steps to help you make the right decisions and keep you on track when buying that Colorado dream home. Here are the Best 3 Tips For First Time Home Buyers Looking to Call Colorado Home.
Step 1: Review Your Credit Report
It’s always a good idea to review your credit before you get too far into the home buying process. That’s because 87% of buyers finance their home purchase, according to recent statistics published by the National Association of Realtors1.
Chances are you will probably need to obtain a mortgage in order to buy your house and your credit will play a key role in determining if you can qualify for new credit. Make sure to dispute any errors and avoid opening new tradelines during, as well a few months prior to, submitting your mortgage application.
Step 2: Figure Out How Much Home You Can Swing With Your Budget
Researching potential homes is a good way to start, but resist the urge to schedule a tour or attend open houses until you sit down and determine how much home you can actually afford.
A good rule of thumb is for your purchase price not to exceed two or three times your annual household income, assuming a down payment of 20% or more with minimal debt. But that can change depending on your specific financial situation.
Alternatively, consider using an only affordability calculator which can help break down your potential housing expense at a variety of different price points, factoring in things like
- Taxes
- Insurance
- Mortgage Insurance
Step 3: Interview Prospective Realtors
Finding the right realtor is a major component to having a smooth and successful purchase process. The right realtor can help provide you with information and insights into local neighborhoods and market trends. Make sure to interview several realtors to make sure their personality, style, and acumen meet or exceed your expectations.
It’s important to find a real estate agent that will truly advocate for you, that has top-notch negotiating skills, and that can offer assistance by answering questions and navigating you through other aspects of the purchase process after you have an accepted offer.
Step 4: Line Up Your Mortgage Financing By Getting Pre-Approved
Getting pre-approved early can make shopping for your home much more streamlined. In fact, it’s a staple in today’s real estate market. Many sellers won’t entertain offers that are not accompanied by a pre-approval letter.
A pre-approval letter indicates to the seller that your lender has reviewed and preliminarily approved you for credit, pending additional documentation. This indicates to the seller there is a strong likelihood you can obtain financing and that the deal won’t fall through.
Step 5: Find the Perfect Home, Then Make an Offer
Once you have done some due diligence, the next step is to start searching for that perfect Colorado dream home. Make sure to tour lots of homes within your price range and take notes on features you like for each one. Smartphones make it easy to take pictures to reference at a later time.
Keep in mind that while you want to focus the majority of your time on the home, you should also review the neighborhood. Note local amenities such as
- Parks
- Public Transportation
- Schools
- Even Grocery Stores
The bottom line is to not feel rushed! Buying a new Colorado home is an important decision so make sure you find the one you can’t live without. When you do, work with your realtor to hash out a good purchase price and contingencies. Then, submit your offer!
Step 6: Complete Any Home Inspections
Once your offer has been reviewed and accepted by the seller, if you elected for any inspections, as contingencies for your purchase, make sure to get those completed as soon as possible.
It’s always a good idea to require a general home inspection to check for structural damage or hidden safety issues with the home. Other common contingencies include pest, radon, and water/septic inspections, to name a few.
You and the seller should receive a copy of the inspection reports which can allow room for additional negotiation if deemed appropriate. Before your sale closes you should have it written into your contract the ability for you to complete a final walk-through of the home.
Step 7: Finalize Your Loan Terms and Prepare to Close
While your inspections, if any, are being completed you will want to finalize your mortgage financing. Make sure to have all your income and asset documentation ready and submit it to your lender promptly.
Your lender will also most likely require an appraisal to be completed as part of the underwriting process.
The underwriting process can take a few days or weeks at times. While your lender is processing your application, finalize your homeowner’s insurance and other tasks needing completion with the assistance of your realtor.
Once your loan has been cleared to close, review your Closing Disclosure. Coordinate your closing appointment and details with your realtor, lender, and title company.
Step 8: Seal the Deal
The last step in the home buying process is signing all your closing documentation. Arrive early at your closing appointment and make sure to bring a valid government-issued photo id as well as any funds needed for closing (unless otherwise pre-arranged or instructed).
After you sign on the dotted line it can take a couple of days for your loan to fund and the paperwork to be retired to the lender. However, once everything clears, the home is yours and you are all set to move into your brand-new Colorado dream home!
Sources:
- NAR. (2020, March 05). Highlights From the Profile of Home Buyers and Sellers. Retrieved November 24, 2020.
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