Home Buyer Guide

While the landscape of home buying has seen many changes, one aspect remains the same: 

Real estate has traditionally been one of the safest and most profitable investments one can make, and recent data still supports that trend. While rising interest rates have forced many people to reconsider buying a home, there remain compelling reasons to invest in real estate.

Real Estate Markets are Cyclical

Like other markets, residential real estate ebbs and flows but typically over time, homeowners see an increase in home value. Most people see at least a 2 percent increase in value year-over-year. However, in the Denver metro market, current statistics show that home sellers enjoyed a gain of over 8 percent from September 2021 to September 2022.

According to an article in Bankrate,  the S&P 500 Index reports that the average annual return on investment for residential real estate in the United States is 10.6 percent. Commercial real estate averages a slightly lower ROI of 9.5 percent, while REITs average a slightly higher 11.8 percent. While ROI fluctuates depending on location and the local market, a real estate investment is usually a good bet, especially if you view it as a long-term venture.

NAR Statistics on Home Buyers

The National Association of Realtors 2021 Home Buyers and Sellers Generational Trends Report indicates that Millennials continue to make up the largest share of home buyers at 37 percent. Older Millennials account for 23 percent and younger Millennials hold 14 percent of the share of home buyers. Millennials have been the largest share of buyers since the 2014 report. Eighty-two percent of younger Millennials and 48 percent of older Millennials were first-time home buyers, more than other age groups.

Below you will find some solid reasons to get out of the rental pit and into the home buying process. Once you understand why it’s important to buy a home, Usaj Realty will be able to guide you through the process with its downloadable home buyers guide. This home buying guide goes step-by-step through the purchasing process and outlines what you can expect. After you read it, a Usaj Realty broker will sit down with you and go over any questions you have and explain the process more in-depth! Call us today at 720-398-2999 and we will connect you with one of our amazing brokers.

Here is why you should consider buying a home:

We are still experiencing rising interest rates, but it shouldn’t necessarily deter you from buying a home.  As interest rates rise, the value of the home you can afford to purchase decreases. Roughly, with every quarter of a percent interest rate increase, you are able to afford 2.5% less home.

However, there are ways to achieve home ownership despite the increase in interest rates.

If you are able to manage a larger down payment, you will not have to borrow as much money. Also, there are a variety of loans on the market. Make sure your lender goes over all your options and explains the pros and cons of each one, and how they will impact your monthly payment.

Buying a home is a great investment.

Home values continue to increase in the Denver metro area and overall, the real estate market is moving to a more balanced market where home buyers have more leverage. It’s important to think long-term with home ownership and think of it as the savings account that your parents insisted you have. Additionally, buying a home and renting it out is a great tool to earn additional income.

Denver offers great transportation options for getting in and out of the city. 

Even if you can’t find a home in the city of Denver, the outlying metro area offers a number of housing options that are close to the RTD light rail and bus lines. Being close to public transportation makes accessing all the city has to offer incredibly easy and convenient. In many cases, you can get from the suburbs to downtown Denver in less than 20 minutes and not have to deal with parking or traffic. Whether you buy a home downtown or in the suburbs, it’s likely a bus connection or light rail station is going to be nearby to take you to your desired location in the Denver metro area.

Owning a home provides you with a great opportunity to gain equity. 

When you rent, you are not investing in anything except your landlord’s portfolio. Owning a home is a great investment and what you save on your taxes is significant. The value of a home typically rises at least 2 percent per year; in Denver, many homes are valued 50 percent higher than they were over 10 years ago! Building equity (the difference between your home’s value and how much you owe your mortgage lender) in your home is an easy way to invest towards your retirement or future home improvement projects. Once you buy a home, you may consider refinancing if interest rates drop or obtaining a home equity line of credit to add value to your home.

You need less cash to close today than a year ago.

A year ago, buyers had to pay for things like appraisal gaps and inspection issues. Today, buyers are more likely to have the upper hand and you probably won’t have to pay for these items. You may even obtain seller concessions, which help pay down some closing costs. Plus, the days of a required 20% down payment are long gone. Most lenders now have many low down payment options available. It takes only an hour’s appointment with a qualified lender to determine what kind of house you can afford. Even if you can’t afford to buy a house now, a lender can help you plan for the future and map out the necessary steps to get you qualified.

How to Buy a Home in Six Steps:

Now that you’ve decided to find your dream home, here are the next steps of your journey can be found in the “Home Buyers Guide.” This manual by Usaj Realty helps people prepare for the purchasing experience and lessen the unknowns. A few of the highlights include:

Step 1: Meet with a lender to obtain pre-approval

Sounds scary, doesn’t it? But the most frightening aspect of this first step is steeling yourself and getting the necessary documents and paperwork in order. Be prepared to show an ID, tax returns, pay stubs, and bank statements including checking, saving, brokerage statements, 401K, IRAs, Roth, etc.

It’s critical to show all sources of income as well as financial obligations such as child support and maintenance. Assuming all the documents are in order, the pre-approval process goes pretty quickly and best of all will help you determine how much you will be able to spend on a home.

Step 2: Meet with a Broker

It’s natural to go online and start looking but to make it happen, it’s advisable to hire a professional. An experienced, reputable and trustworthy real estate agent is worth having by your side when you get ready to make what will most likely be the biggest purchase of your life. The knowledge they possess of the local market and their ability to zero in the properties that will be best suited for you is worth the time and effort you’ll save yourself. Their commission comes from the sale price of the home so you pay nothing and get all the benefits. Usaj Realty brokers are carefully selected and offer “white glove service.”

Before you go on showings, it’s important to be thinking about what your perfect house would look like: Single-family home or condo? How many bedrooms and bathrooms? Ranch or multi-story? Do you need a yard? Is public transportation important to you? If you have children, how is the local school ranked? What kind of neighborhoods do you like?

Step 3: Search for Homes

Once you and your Usaj Realty broker have found a potential fit, it is time to go and view the property. Consider the following details while you’re touring and what aspects you like, dislike, or would want to upgrade:

• Exterior condition Patio, balcony, and/or yard
• Interior condition Floor plan, AC, and heating systems
• Garage
• Laundry room
• Kitchen Appliances
• Bathroom fixtures
• Bedroom size 
• Master bedroom/bathroom

Once you see the first couple of properties, you’ll have a better sense of what’s really important to you and what things you can let slide. Your broker should be asking you lots of questions and be pointing out specific qualities/drawbacks of each house you visit. This process will help you to narrow down the parameters and allow you to focus on your needs.

Step 4: Making an Offer

You’ve found the “right one” and are ready to make an offer. This is where the experience of your broker will pay off. Many key factors go into making the right offer: market conditions, age/condition of the home, length of time on the market, inclusions and move-in date are just a few. A seasoned broker will have done the necessary research to determine a reasonable offer.

Following the offer, three events will take place: The owner will accept or reject the offer; or, will provide a counter proposal that reflects either different terms of the sale or a different price. Except in a hot market, it’s not unusual to have an extended back and forth with counter proposals.

Step 5: Under Contract

Once the offer is accepted, the clock starts to run and it’s important for the buyer to complete the final steps in the home-buying process — home inspection, obtaining financing and homeowners’ insurance, and enlisting the services of a title company (which ensures that the seller is the current deed holder, there are no outstanding liens on the property and provides title insurance which protects you from any claims made against the property from the previous homeowner).

Step 6: Closing

This is the last step before getting the keys to your new home. Bring your ID and patience to get through all the paperwork you’ll have to sign. You’ll know ahead of time how much you’ll be required to wire to the seller or have in the form of a certified check. This may be the last step in the home-buying process but hopefully, it will be your first step to many wonderful years in your new home!