With impending hikes in interest rates, delaying is no longer an option for people considering a home purchase. Time is money when it comes to buying a home and in another couple of months, it most likely is going to be more expensive to acquire a place of your own.
The Fed is expecting to raise interest rates in 2022 as a result of persistent high inflation and a strong labor market. The last time interest rates were increased was in December of 2018.
Low interest rates, the pandemic, and a frenzy of home buying has caused home prices to skyrocket across the country. In the Denver metro area, more homes sold in 2021 than any other year on record and the median home price went up by a stunning 19.78 percent. We also ended the year with the lowest inventory on record.
Despite higher home prices and meager inventory in the Denver area, it is still possible (and encouraged) to start the home buying process if you haven’t done so already. Interest rates are still low, favorable down payment programs are in effect and a variety of loans make becoming a homeowner easier than you might think. And home prices aren’t expected to drop anytime soon.
By following some pivotal guidelines, your chances of becoming a homeowner can be dramatically increased. Below you’ll find some tips to help you get started on buying a home and enhance your chances of getting under contract.
Finances/Loan Paperwork is in Order
Unless you are in a position to make a cash offer, it’s imperative to have met with a lender and have assurance a loan will be approved. Pre-approval status is absolutely necessary when making an offer on a home and getting it accepted. Furthermore, hefty earnest money goes a long way to demonstrate to the seller that you are committed to buying the house. It’s critical to know ahead of time how much cash you’ll need up-front and what your monthly payments/budget will be before considering homes on the market. The last thing you want, especially if you are a first time home buyer, is to be overextended on your mortgage and property upkeep requirements.
Life is a Compromise
It’s rare, if not impossible, to find a flawless home. Life is not perfect, and neither is buying a home. While we all have ideas of what comprises the ideal home, reality often begs something in between. Since home sellers have the upper hand in the Denver metro residential real estate market, home buyers must be prepared to adjust their expectations dramatically. The ability to look beyond cosmetic blemishes like dated carpeting and flooring, faded wallpaper, old kitchen appliances, and even a questionable floor plan is key to getting under contract. If you are having trouble envisioning what a home might become instead of what it looks like now, bring in an interior designer or another third party who may be able to help you see the possible transformation.
Patience is a Virtue
Buying a home in this market requires a positive mindset and an abundance of patience. Setting appropriate expectations and keeping a level head will go a long way in establishing success. Be ready to ask your Usaj Realty broker the right questions before beginning your search. How long will it take to find a house? What is the best way to search? How much time should pass before I re-evaluate? What should I be expecting in my home search? How can I be successful in the search? How can I set myself up for success?
Must Haves vs. Nice-to-Haves
Setting yourself up for success includes a list of must-haves and nice-to-haves when it comes to finding a home that matches your lifestyle. Don’t be afraid to establish a long list at the start. There’s nothing wrong with a pie-in-the-sky approach but know that all your wish list items probably won’t be met. Some of the items will surely be crossed off the list as you narrow the must-haves to three or four critical components. Maybe you have kids and want them in a favorable school district but you’re priced out of the neighborhood you have in mind. Consider the adjoining neighborhoods that are still in the district and are home to families. Perhaps you want a yard but would a nearby park be sufficient? Do you really need an office or could a flex-space be established? Finally, keep in mind that you can always remodel and add features that the current home lacks.
Gone are the days when you can take your time to mull over your choices of homes. All you need to do is look at the home inventory in the Denver metro area and the average number of days on market, and it’s easy to see that people who are quick on their feet are getting the deal done. Waiting and delaying your decision-making not only can create frustration but can cost you money in the long run.