You might be able to get into your first home for just $1,000. Call (303) 222-0027 or e-mail email@example.com for a free list of loan programs that are available for first time home buyers.
If you’re a first time home buyer, you might not be aware of the steps involved in buying a condo, loft, townhome, duplex, or house. Some of these steps can be super fun, while others are a bit tedious.
The primary steps involve finding the property, successfully putting it under contract, and obtaining your loan. As real estate agents who are experienced at working with first time home buyers, we can help you find the home you want. And we also have contacts in the mortgage industry who can help you get a first time home buyers loan, and possibly closing costs and/or down payment assistance.
Here’s a look at the first time home buying process, as a step by step process…
Get Your Down Payment Ready
Many first time home buyers use FHA loans, which allow you to put 3.5% down (as opposed to the 5%-20% down that’s required on a conventional loan). There are also closing costs and down payment assistance programs available through most of the cities in the Denver metro area, CHFA (Colorado Housing and Financing Authority) and HUD (Housing and Urban Development). Once you have your down payment ready, or have identified a program that will assist you, you’re ready to start looking for your first home.
Put Your Finances In Order
To qualify for most types of loans that are available for first time home buyers, you’ll need a credit score of at least 620 or higher. If you don’t have a high enough credit score, consider repairing your credit and/or paying down some debt and look through our other tips for raising your credit score.
Figure Out How Much House You Can Afford
If you don’t have a monthly budget, sit down and create one, and figure out how much of a house payment you can comfortably afford to make. Once you know what your monthly payment can be, we can help you figure out – at today’s interest rates – how much you can borrow. Note that most mortgage companies and lenders won’t let your total monthly debt (mortgage payment, credit card payments, student loan payments, car loan payments, etc.) exceed 41%-45% of your gross monthly income. And, if your budget doesn’t match your idea of the perfect home, be patient. Many condo owners have found that first homes lead to second homes.
Start Working With A Real Estate Agent
Once you know how much house you can afford, you can begin to focus in on what your first home will look like. We can help you make a list of what you want in your first home, whether it’s a condo, townhome, duplex, or house. We can also talk to you about what size of property you want, how many bedrooms and bathrooms, features, and area of town that you’d like to live in. From there, we’ll compile a list of properties you might like.
Contact A Lender
Early in the real estate search process, it’s a good idea to go ahead and contact a lender, even if you haven’t yet found a home that you want to make an offer on. The mortgage broker or lender can step you through the loan approval process, potentially find you down payment assistance, and get you pre-qualified for a loan. They can also help you compare home loans.
Get Pre-Qualified For A Loan
Getting pre-qualified for a loan has always been an important part of the process for first time home buyers, but now that Denver’s real estate market is so hot, it’s even more vital. When you decide to submit your offer to a seller, if you can include a pre-qualification letter from a lender, showing that you have the financial strength to buy the property, you’ll be in a better position.
Look At Properties With Your Real Estate Agent
Now, the fun part begins – looking for properties. Based on your criteria and what you can afford, we’ll make a list of properties that we can tour together. Some first time home buyers look at one property and fall in love, others needs to visit five, or even dozens of properties. Whatever it takes, we’ll keep showing you properties until you find the one you want.
Submit An Offer On A Home That You Want To Buy
Once you’ve found the property that you want for your first home, we’ll submit an offer to the seller. This is where our real estate experience really shines. We’ll advise you on what to offer (including price, move-in dates, earnest money, etc.), and we’re happy to report that we’ve had good luck in recent years getting our clients’ offers accepted, even when competing bids are submitted. In part, this is because we know the market, and we do our homework. We’ll pull comps from the surrounding areas, both comparable properties that are for sale and comparable properties that have sold recently.
Go Under Contract
Once your offer is accepted by the seller, celebrate! You are now under contract.
Apply For Your Home Loan
Your signed real estate contract will be sent to the mortgage company or lender that you’re working with, and you’ll apply for a loan on your home. The loan approval process for first time home buyers involves submitting: tax returns, verification of income (with pay stubs and/or a letter from your employer), bank statements, and more. It can be a tedious, frustrating process, but a good mortgage broker or lender can make all the difference in the world. We have mortgage brokers and lenders that we trust, who we’ve worked with over the years, and we’d be happy to introduce you to them.
Hire A Home Inspector To Look At Your Property
Once you’re under contract, you’ll want to have the property inspected as soon as possible. This isn’t a requirement of most lenders, but still, it’s a good step to take. A qualified home inspector can identify any repairs or maintenance that need to be completed, as well as serious flaws or defects in the property. Most home inspectors also can do a great job of educating you about the property and giving you tips for how to take care of it. Home inspections generally run $200-$400, and they’re well worth the money. Once repairs, maintenance, and defects are identified, we can ask the homeowner to correct these, and often they will.
Have Your Property Appraised
As soon as you go under contract, your mortgage company or lender will order an appraisal on the property. They require a home appraisal, but you pay for it (as part of your closing costs). The lender wants to be sure that the property is worth the amount you’re paying, so it’s a good safeguard. If the appraisal comes in at less than what you’ve offered the seller, we can always go back to the seller and ask them to lower the price.
Secure Loan Approval
Your mortgage company or lender will use all of your financial documentation to decide whether to give you a loan. If you’ve been pre-qualified for a loan, assuming that nothing has changed financially in your life, your loan should go through. Once you have loan approval, the mortgage company or lender will draw up the closing documents.
Go To The Closing
You and the seller will come to the closing (at the same time, or separate times). You’ll need to bring your down payment and/or closing cost fees to the closing, along with your Colorado Driver’s License. You’ll sign a bunch of papers, probably more than you’ve ever signed in a single sitting, and then it will be over! You’ll be the proud owner of your first home!
Move Into Your New Home
In a typical real estate contract, the sellers have three days, after the closing, to move out. They should leave the place in good shape, clean and ready to move into! And that’s when you should truly celebrate – the day you’re able to move into your new home!
Few events in life are more exciting than moving into your first home. And if you’ve chosen us to be your real estate agents, we’ll be honored to have been a part of this process!
For more information on the step by step process of buying your first home, please call (303) 222-0027, or e-mail firstname.lastname@example.org.
Please note: If you have any further questions and/or would like to find out more about properties in the Denver metro area, we’d be happy to meet with you for a free consultation. Once we know what you like, we can also set you up on free e-mail alerts that notify you as properties become available.