How Do You Even Get Started Buying A Home? – The First Time Buyer’s Guide
Buying a home can be a scary choice choice, but the benefits definitely outweigh the risks! In fact, if you aren’t already aware, check out my blog about the Benefits to buying over renting a home!
You will need to have some cash before you can make any offers. There are generally some up front costs when buying a home. The first one is Earnest Money – basically a certain amount of money (often about 1% in Denver these days) to show that you are making a legitimate offer. Yes, Earnest money is required, and will be added to your down payment.
Now, you may have to put some money down on the home out of your own pocket. This can range from 1% to 20% depending on the situation. But the higher rates are usually for people who are buying an investment property. Usually It’s around 3% to 3.5% for a first time buyer. However, there are a lot of programs to help you out. For more information about First time buyer financing, take a look at the links below.
Also Check out Financing for First Time Buyers, tips from loan adviser Brandon Wilkinson with People’s Home Equity!
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Choosing a REALTOR/Real Estate Agent – And is there even a difference?
The next step is to talk to a REALTOR, or real estate agent, (Yes, there is a difference). This person will evaluate your situation, explain the different roles they can take in the transaction, ask you to sign The Agency Agreement and help you find a home! There is no shortage of Real Estate Professionals in Denver today, so you will kind of have your pick. You want somebody you know will take the time to listen to your specific wants and needs. Experience definitely is a plus, but you want someone who will take the time to help you make the right choice, explaining their opinions, and helping you understand everything you may not understand, not just telling you what to do.
As I explained in The Agency Agreement, your agent has a fiduciary responsibility to you, and if you don’t believe they are holding up to that standard, you have the ability to terminate the contract, and even and report them to DORA.
As a part of the Metro Brokers team, I am a REALTOR. But I also believe that patience and thorough explanations are what make a good agent for any buyer. That’s why I work hard to make it the cornerstone of my practice, and the key to your experience! Use one of the blue buttons on this page to contact me directly…
Contracts & Financing – Why You Need A Realtor Part 1
So you have signed the agreement, now your agent will most likely send you to a lender to get Pre-Qualified, and advise you about the programs for which you are eligible, to help with down the down payment and closing costs. Most of the time, your agent will send you to a lender before signing the contract, but some will do it after. It just depends on the agent and the situation. This is a very important part of the process. You will want to pay very close attention, it could mean a big difference in the amount of $$ you pay every month!
From there, assuming everything goes well (It rarely does! A lot of the time buyers have to come back after fixing a couple of things. No big deal, it happens to most of us!!) you have a letter of qualification from the lender, a price range, and an idea of what you want, now comes the fun (and sometimes stressful) part – finding a home!
Your agent directs you to REcolorado and together you get a list of homes you like, and spend a few days looking at them. Then one day, There it is, the perfect home.
… So now what?
You tell your agent, and he starts drawing up some paperwork. The Contract To Buy and Sell Real Estate! This contract is huge! and there are a ton of potential pitfalls in it, if not handled correctly. Who knew buying a home could be so complicated?
Contract filled out, negotiated, offer made.
Now we wait!
Executing The Contract – Why You Need A Realtor Part 2
Your agent calls you the next day, “They put in a counter-offer”. A quick note about a counter-offer, if a seller sends you a counter-offer, they are not required to hold the property. So you must act quickly to accept or counter again (with a brand new contract), you never know when a better offer might come in. A listing is only “under contract” when one part accepts an offer, and the second party has been notified that they have accepted. It’s important to make note of that. A contract is not live until both parties have been notified that it has been accepted. This means that up until a seller has been notified that you have accepted their counteroffer, they can still accept another offer.
So now you have a contract. There’s inspection deadlines and acceptance deadlines and deadlines and deadlines. For every time one party is required to do an inspection, there is a deadline for the other party to approve or decline it. Declining it will effectively release both parties from the contract. So if you say you don’t like something that came up on the home inspection, Before the acceptance date, that’s it! No more contract!.
But for the sake of this article, let’s assume everything went according to plan
Closing Day! You Are No Longer a First Time Buyer!
After all the inspections and deadlines and headaches and issues, It’s finally here! The closing table! Generally you meet up at a predetermined location, The seller(s), Seller’s agent(s) and their assistants, You, Your agent(s) and their assistants, and the title company and lender. You fill out a ton of paperwork, and funds exchanged. And after your hands are sufficiently cramped from signing documents, it’s done! Congratulations, you are a homeowner!
Okay, so there you have it, my First Time Buyer’s guide to Buying a Home. I hope it was enlightening! If you have any questions, feel free to let me know below!
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