FIRST TIME HOME BUYER GUIDE
Greg offers his first time home buyer clients an unmatched experience that is fun, low drama, and informative. You will feel like you are his only client as he focuses on making sure you are ready and confident about buying a home.
As a first time home buyer you need someone in your corner to help you through all of your questions without feeling like you are being bothersome. His goal is always to give you knowledge so you can decide if it is truly right for you. Being a first time home buyer is scary and you need to ask all the questions you like.
Is Ownership Right For You?
Before jumping in feet first, you should determine if home ownership is right for you. If you feel you will live in the area for the foreseeable future it is likely a great decision:
- Understand all the little costs that you will be responsible for once you own versus rent and how this fits your budget. You will now be responsible for property taxes, insurance, maintenance, water/sewer/trash.
- Long Term Goals. How does owning help you achieve your long term financial and lifestyle goals? See my video below to help you grasp the math behind it.
- Be prepared to be in control of your property as you will be making improvements as you see fit, repairs, having parties you could never have before, get that dog you always wanted, etc.
Organize Your Finances
It is rare that a first time home buyer will have cash to purchase a home, so it is key to work your finances and know how much of your monthly income you would like to spend on your new home:
- Determine how much of your income you are okay with spending on household expenses and how much buffer you have. Lenders will have maximums, but come up with your own number first for both upfront down payment and monthly expense over the life of the loan.
- Get Pre-Approved. In the hot Denver market, you cannot submit an offer without being pre-approved…it will simply be rejected. The lender will highlight the loan products that you can get as well as the costs of those products based on your credit score and financial situation. Note that pre-approved and pre-qualified are different. Pre-approved is what you will ultimately need with your offer.
- If you can’t afford a surprise repair then make sure the property you target is in great shape and you get appropriate insurance and a home warranty to protect yourself or have enough in a savings account to cover the surprises.
Shop for a Realtor
Pick out a Realtor that complements what you need most and works with first time home buyers. Consider the following:
- Does he/she fit well with your personality?
- Do you think they are self-serving and after commissions or after your best interests? What is your “gut feel”?
- Time/Energy. Do you think they will have the time to attend to your needs? Do you feel enough energy from them to meet your needs? Do you feel rushed or do you feel you can ask an infinite number of questions?
- Are they thoroughly answering your questions? Do you feel like they are hiding something?
As a side note, most Realtors will require a Buyer Agency Agreement that protects both parties and spells out how and who pays the commission (typically the Seller). It should cost you next to nothing to use an agent to buy a property.
Find the Right Home
Considering your goals, what do you want in your first home and how does it fit you over the long term:
- How many bedrooms/baths do you want or need? Do you want to accommodate friends and guests? How many square feet?
- Is commute time important? Distance from local dining? Note that this is important for you to guide the Realtor. Your Realtor cannot “steer” you if you ask for only the good areas or stay away from the bad areas as that is prohibited by Federal Law.
- Special Features. Do you want a big yard? How about an oversized garage or gourmet kitchen?
- Rank Importance. Ultimately there is always some give and take, so work to understand what is most important to you.
Make as Good of Offer You Can and Close
Ultimately before you make an offer ask yourself “does this feel like home”? Below is a quick rundown of the process:
- Visit as many homes as needed to feel comfortable that it is the one for you.
- Don’t be influenced by Days on Market, Back on Market, Pending Offers, etc. Make the goal to find the right home for you and use the other information in the offer process.
- Make your offer competitive and attractive, after all you just spent a considerable amount of time finding the perfect home and you don’t want to lose it. Are you willing to put a little more cash down if the appraisal comes up short? Are you willing to waive any cosmetic issues that come up in inspection? Go over the details of the contract and make sure you understand them by talking with your Realtor and if needed an attorney as it is a legally binding document. Your agent should talk with the listing agent to promote you and your offer as positive as possible.
- Have a competent inspector inspect the home as the inspection process is critical to the long-term ownership of the property.
- Typically, a title company will hold closing and the money is in an escrow account. You sign and exchange paperwork, receive the keys and off you go.
Just take it one step at a time, the closing process takes 30-60 days depending on your lender, inspection issues, etc.