9 Essential Steps to Buying a House with Usaj Realty
Buying a house can often feel like a complex endeavor. With Denver’s vibrant and competitive real estate market, having a clear roadmap of the home buying process can make it significantly less stressful. Usaj Realty is here to guide you through these nine crucial steps:
1. Check Your Credit
Before you get started, take a close look at your credit report. This important score will ultimately influence your mortgage terms. If there are any errors, dispute them immediately. Understanding and potentially improving your credit score before you apply for financing could save you a significant amount of money in the long run.
What is a credit report?
A credit report compiles information from the three major credit reporting agencies: TransUnion, Equifax, and Experian. This report is essential for calculating both your FICO score and your Vantage score. You can obtain free reports from all three agencies at least once a year. If you discover any inaccuracies in your report, it’s crucial to dispute them immediately to ensure they are resolved before seeking financing and buying a home.
What is a FICO score?
A FICO score is a numerical representation of your creditworthiness, used by lenders to assess risk. Calculated by Fair Isaac & Co., this score ranges from 350 to 850.
A higher credit score typically results in a lower interest rate. Generally, a credit score of 720 or above qualifies you for favorable rates on conventional loans, though specific criteria may vary by lender. For FHA loans, approval is often possible with a credit score of 580 or higher.
2. Set Your Budget
Define what you can afford and set a budget based on your financial circumstances. What may be helpful is using an online affordability calculator to get a better sense of how your income, debts, and potential down payment will impact your purchasing power. Also, consider what is essential in your new home – is it proximity to the thriving Denver downtown, a sunlit backyard, or a spacious kitchen?
By prioritizing these elements, you can navigate your home search more effectively while staying within your financial limits.
3. Find Your Real Estate Agent
At Usaj Realty, our Denver-savvy real estate agents are well-equipped to guide you through the competitive local market. From identifying home value trends to providing trusted referrals for lenders, we are committed to simplifying the process and helping you secure your dream home in the Denver area.
Here are several ways a buyer’s agent can help you:
- Market Insights: They analyze home value trends, new developments, buyer demand, and the market landscape.
- Offer Price: They assess a home’s value and suggest a competitive initial offer.
- Negotiation Skills: They know when to push for a lower price and how to negotiate contingencies and repairs.
- Local Expertise: They provide insights about the neighborhood and local schools.
- Professional Referrals: They can recommend trusted lenders, attorneys, contractors, and other service providers.
- Experience: They streamline the process by handling challenges, tracking deadlines, and managing paperwork efficiently.
4. Get Pre-Approved
Get pre-approved by a lender to know how much you can borrow and demonstrate your seriousness about buying to sellers. Remember, you don’t need to stick with the same lender to finance your loan post pre-approval. We recommend getting estimates from multiple lenders to ensure the best deal.
To obtain pre-approval, a lender will evaluate your debt-to-income ratio and assess your creditworthiness by reviewing key documents.
Once pre-approved, you’ll receive a letter detailing the amount you can borrow, which is a valuable tool when making an offer on a home. It shows sellers you are a serious buyer, especially in competitive markets with multiple offers.
You are not obligated to use the same lender for your loan as the one that provided your pre-approval. It’s wise to get estimates from multiple lenders to compare interest rates and fees before finalizing your mortgage. A one percentage point increase in interest can add over $350 to a monthly payment on a typical Colorado home, totaling nearly $140,000 more over a 30-year mortgage.
Remember, your debt-to-income ratio will be re-evaluated before closing. Taking on additional debt can impact the total loan amount available during the financing process.
5. Start House Hunting
With a clear idea of what you can afford and what you’re looking for, you can begin the exciting process of searching for homes. Whether you seek the historic charm of Denver’s older neighborhoods or the modern flair of new constructions, Usaj Realty will help you navigate the Denver real estate market and help buying a home.
6. Make an Offer:
Once you’ve found the right home, make your offer based on a comparative market analysis (CMA), a calculation of the home’s market value based on comparable recent sales in the same area. We’ll help you determine a fair offer and guide you through negotiations.
7. Home Inspection:
Conduct a home inspection to know any potential structural or systemic issues before you buy. If the inspection reveals major issues, we can assist in renegotiating with the seller to have these issues fixed prior to closing or obtaining a credit to make repairs post closing.
8. Secure Your Financing
Apply for your mortgage, and if successful, you’ll receive a “clear to close” from your lender. Ensure all requested documents are promptly provided to avoid delays. Simultaneously, schedule an appraisal to verify the home’s market value, critical to ensuring your investment is sound.
9. Closing
After these steps, you’re ready to close and you’ll be buying a home! You’ll sign numerous documents at the title company, provide the required closing costs, receive your keys, and officially become a Denver homeowner!
Navigating the Denver real estate market can be challenging, but with the right guidance from a Usaj Realty agent, securing your dream home can be a rewarding journey.
