Being a first-time home buyer in the Denver metro area can seem like a daunting task. With low inventory, rising mortgage interest rates, and cash offers, the outlook may appear pretty dismal.
However, there are success stories out there! Keep in mind that last month (February 2022), the Denver Metro Association of Realtors reported 3,202 homes sold and 4,161 homes were under contract. Homebuyers are getting into the end zone when it comes to finding the right home.
You, too, can make it into the win column with perseverance and follow-through. Here are a few considerations to keep in mind before you begin your home search. By following these guidelines, your path to homeownership will be less bumpy and more likely to result in getting under contract more quickly.
Tip #1: Do Your Research So You Have Clear Expectations
In other words, prepare yourself. Think of yourself being back in school, doing research for an important paper. Bring your A-game!
As a first-time homebuyer, you already may know some of the rudimentary aspects of home buying but make sure you are well versed on what is involved in being a homeowner. Here are a few areas to explore:
Behind the Scenes Costs of Being a Homeowner
Unlike renting, as a homeowner, you’ll be responsible for a myriad of costs associated with your new home. Some of these responsibilities include paying for things like:
- Utilities (water, electricity, and heat)
- Trash pickup
- Internet service
- HOA fees
- Property taxes
- Homeowner’s insurance
- Yard maintenance
- Home repairs
- Home improvement projects.
It’s imperative you are familiar with these expenditures ahead of time so you can decide if you’re financially ready for this big step.
The Mortgage Loan Process
Most first-time homebuyers will need a loan to become a homeowner. Before you start looking at listings, it’s advisable to sit down with a couple of different lenders and determine what kind of loan(s) will best suit your situation. Be prepared to submit all kinds of documentation that details your financial situation. It will seem exhausting at times! The lending organization is not only looking out for their best interests but also yours, and wants to make sure you will be able to pay the mortgage each month.
Before you start looking at listings, it’s advisable to sit down with a couple of different lenders and determine what kind of loan(s) will best suit your situation.
You’ll need all the information on your assets: bank statements, money in the form of gifts, investments, etc. Next, all of your income: W2s, pay stubs, tax returns, social security income, trust money, pensions, alimony, etc. You’ll also need to disclose if you have suffered foreclosure or bankruptcy, and what your monthly expenditures are: credit card payment, student loans, child support, etc. Finally, you’ll need your driver’s license or other approved picture ID.
Also, about 95 percent of people who apply for a loan fall into the pre-qualified category. It means that the appropriate information has been presented, but has yet to be verified, and indicates the person can afford X amount of a loan.
Pre-approval means the person has submitted all documentation, there has been an income analysis, the documents have been verified and someone has viewed the paperwork, much like the underwriter will. Pre-approval carries more weight. Once you are under contract and formally apply for the loan, you may need a few updated documents before submitting to underwriting but overall, everything is in order and you will have better results. It makes for a smoother loan application process.
Get a Clear Picture of the Lifestyle You Want to Have
This category includes many elements which may shift during the home buying process. What type of home is desirable? Single-family, townhome or condo? Ranch or multi-level? Do you want to live in or near the city, or in the suburbs? Is the school district important to you? How about a yard? Is having public transportation close to your residence a consideration? What about having shopping, restaurants, attractions or parks nearby?
There is a myriad of must-haves and nice-to-haves which you should be thinking about. Keep in mind, these items may change in importance over time. While some of the homes you’re considering may not have exactly what you want, you might have to compromise and focus on what is truly important to you.
It’s helpful to have a list of features you are looking for when it comes time to actually start searching for homes. It will speed up the process and help you and your agent zero in on the properties that will fit your criteria.
Tip #2: Be Decisive!
In this fast-paced market, it’s important to act fast and not mull things over for too long. This ties in with having done your research – knowing what kind of home you want and how much you can afford. Ultimately, in the current market, you will want to be one of the first tours at the home and one of the first offers submitted, which means your window to decide if you want to submit a strong offer is very small.
The bottom line is that homes in the Denver metro area go under contract FAST, and you have to be prepared to act quickly. Those who move expeditiously are rewarded; those who don’t are left behind.
The bottom line is that homes in the Denver metro area go under contract FAST, and you have to be prepared to act quickly.
Tip #3: Work with a Usaj Realty Agent
With so much information on homes for sale readily available online, many first-time buyers might think they can do the work themselves.
But going at it alone can put first-time buyers at a disadvantage. A good buyer’s agent is one of the most valuable tools a first-time homebuyer can have. They know the details about neighborhoods and home values. As experienced professionals, they are more likely to recognize a good deal and when a deal is too good to be true.
A great buyer’s agent will:
- Help you refine your search to include just the homes that match your criteria
- Help ensure you don’t miss any homes that do match your criteria based off tricky MLS technicalities
- Take you to view homes and give expert insight
- Walk you through each step of the home buying process and explain how to make your offer stand out
- Act as your representative in the contract negotiation process
- Help you during the under contract process and cross the hurdles like inspection issues and appraisals not matching the contract price
- Get you to the closing table and accomplish your home buying goals!
Next Steps: Getting the Home Buying Process Started
There is a lot to consider as you shop for your first home. Make sure you talk to a lender to find out how much home you can afford, and then, you can put yourself at a significant advantage by working with one of Usaj Realty’s skilled buyer’s agents.
If you are ready to begin this exciting process, please contact us and we’ll be happy to help with your search.