Whether you’re a first-time homeowner or moving to Colorado for its breathtaking sceneries, there are many things you should take into consideration before sealing a deal. And if you’re new to buying properties, check out our first-time homebuyer guide in Colorado to ensure you’re making the right purchase.
Why Buy a Home in Colorado?
Colorado is undeniably one of the most beautiful states in the US, offering plenty of outdoor activities and stunning landscapes and sceneries. Many are moving to Colorado for its economic opportunity and work-life balance, allowing access to an active lifestyle. The state also boasts world-class ski resorts, attracting over 12 million tourists annually. Aside from its natural wonders, Colorado has reasonable real estate values, costing around $500,000 for median average homes. But if you’re coming from a small town, your housing budget in Colorado can afford you to buy a bigger house or a mansion.
On the other hand, if you’re coming from an expensive state, such as California or New York, you’ll find Colorado homes more affordable, considering their richness and environment. If you’re a first-time homebuyer, purchasing a home in Colorado is also a good investment since the housing prices are rising daily and have a fast market. In addition, buying a home in Colorado during winter is ideal as sellers strategically price them lower and allow buyers to test if the property can withstand extreme weather conditions. Thus, buying a home in Colorado is a good investment, whether as a primary residence or for vacation purposes.
How to Buy Your First Home in Colorado?
If you’re wondering how to buy your first home in Colorado, our first-time home buyer guide can help get things done. But like other investments, purchasing a home is the most crucial as it involves financial, legal, and of course, decision making. So before you start the home hunting, read the following tips to buy your first home in Colorado.
Step 1 – Ready Your Finances
If you’re eager to buy a home in Colorado, the first thing you must look into is your finances. While looking for a home can be fun and exciting, every serious buyer ensures that their finances are in order. Don’t just go out home hunting and list down your prospect purchase. Instead, calculate your income and how much debt you can manage to pay regularly.
Step 2 – Determine Your Budget
After checking your finances, the next step is to determine your budget. It is one of the most difficult as you have to decide wisely on the financial burden you can carry to purchase a house. Most buyers often make mistakes with their budget and only base it on their approved loan amount. So check everything from your daily expenses to monthly dues.
Step 3 – Find a Local Mortgage Lender
Another good tip to make your home buying experience better and easier is to find a trusted mortgage lender in Colorado. For first-time home buyers, it can be intimidating to transact with a mortgage lender. However, it is necessary to find a local lender first before home hunting since they can provide options and make closing the deal easier than national lenders.
Step 4 – Get a Pre-Approval Letter
Once you’ve determined your housing budget and found a trusted mortgage lender to transact with, get a copy of your pre-approval letter, indicating you’re a serious home buyer. Securing a loan pre-approval letter is essential, especially if you’ve decided to purchase a specific home. If you don’t have it and send a written sales contract to the realtor, your offer might be left hanging due to a lack of legitimacy to purchase a home.
Step 5 – Find a Trusted Real Estate Agent
The buyer’s greatest ally in buying a home is a good and experienced realtor. They will walk you through the home buying process and answer your queries. Thus, hiring a trusted real estate agent can lessen your burdens, ensuring documentation and successful transaction. Furthermore, a local realtor is ideal since they’re knowledgeable of the Colorado market and can assist in getting good deals.
Step 6 – Consider Down Payment Assistance Programs
Back then, buyers require a 20% down payment to purchase a home. But today, buyers can avail of varying down payment programs, such as the Colorado Housing Assistance Corporation (CHAC) loan, designed for first-time homebuyers who have low to moderate income. The Colorado Housing and Finance Authority (CHFA) loan programs can also ease the burden of home buyers, allowing as low as $1,000 down to purchase a home.
Step 7 – Build a Savings Fund
Saving for your home is not only for the down payment and monthly mortgage fees. If you purchase a second-hand house, you might renovate some areas. Also, building a savings fund for home maintenance is essential to lessen the upkeep cost in the future. So before you purchase and move into your new home, save as much as you can.
Step 8 – Search for Lower Offers
An often move some new home buyers make, purchasing based on their approved loan amount. For example, if you’re approved to loan $500,000, you might search across the state for the most beautiful and biggest house and max your home loan amount. Instead, look for better and lower offers, and you may be able to find your perfect home for $450,000.
Step 9 – Location Matters
Buying a home for the first time can be overwhelming. But choosing the right location should be one of the top deciding factors as it affects house values. You can also look for a neighborhood within your budget that makes your home hunting easier. Moreover, ensure that the location of your future homes is accessible to your needs and has amenities that can assist your lifestyle.
Step 10 – Meet Your Needs
Relating to the location, purchasing a home should meet your primary needs. But for first-time homeowners, your house is like a blank canvas allowing you to renovate and transform every space, from the bathroom to the backyard. While you cannot purchase the perfect home that has it all, it is ideal listing the things you need now and in the future.
Step 11 – Do a Home Inspection
Most of the time, buyers overlook this process and close the deal once they like a home. On the other hand, doing a home inspection is beneficial for buyers, which allows them to see every part of the house to determine maintenance problems. And if there are areas that require maintenance work, buyers can haggle and close a lower offer.
Step 12 – Negotiate Professionally
The second last step is negotiating a deal and making a sales contract once you found the perfect home to purchase. Your realtor plays a vital role in the negotiation as they can influence the transaction. Furthermore, as a first-time homebuyer, don’t offer a low-ball deal. You must be reasonable during the home inspection and only concerned with significant issues with real monetary value.
Step 12 – Close the Deal
After going through a home inspection, appraisal, and negotiation, proceed to the final step to close the deal. First, secure the necessary documents from mortgage and title companies and communicate with all parties to ensure the closing. Then, schedule a final inspection 24 hours before the closing date to check significant issues that can affect the deal or appliances included in the purchase but suddenly removed.
Step 13 – Start Now
If you’re serious about buying your first home in Colorado, we recommend starting now. Since the process differs for everybody, follow our first-time home buyer guide today. Starting today will give you more time to manage your finances, look for the right realtor, and learn every detail of the home buying process in Colorado.
10 Mistakes From First Time Home Buyers in Colorado That You Must Avoid
As a first-time homebuyer, educating yourself about the buying process can help save your time and money and find the right property. In addition, it helps determine lurking pitfalls and avoid common mistakes of first-time home buyers. While the process can be intimidating, our first-time homebuyer guide has included the mistakes from first-time home buyers in Colorado that you must avoid.
Mistake #1 – Being Too Quick Deciding or Too Picky
Buying a home is everyone’s dream, and you would wish that all your needs in your house. However, it can be challenging to find the perfect property that has everything. Unless you’re building your own dream house, you need to compromise and avoid being too picky when buying a home. On the contrary, don’t be swayed by upgrades and decide quickly. Only go for features that have monetary value and can add purpose to your life.
Mistake #2 – Buying the Most Expensive Home in the Area
If you see yourself living until retirement in the house you’re purchasing, or see it as your dream home, go for the most expensive property. Nonetheless, if you’re planning to sell it in 5 to 7 years, don’t purchase the most pricy home since future buyers will buy a property based on the neighborhood housing value, pulling down your house value.
Mistake #3 – Not Getting a Pre-Approved for a Loan
As stated earlier, securing a pre-approved loan determines the purchasing capacity of the buyer. It is also an indication of a serious buyer, so make sure to get a pre-approved loan before you start searching for properties. In addition, getting pre-approved will help you determine your financial capacity and speed up your home buying process, especially for urgent closing.
Mistake #4 – Not Budgeting Additional Monthly Fees
One of the common mistakes of first-time homebuyers is only focusing on the total sales price of the property and thinking that their loan is enough to cover everything. But in reality, purchasing a home comes with plenty of financial responsibilities, such as local taxes, utility costs, and monthly homeowners association (HOA) fees. Thus, work with a realtor and tax professional to determine your possible expenses.
Mistake #5 – Not Considering the Location
Another common mistake first-time homebuyers make is not considering that the location matters when purchasing a property. Aside from home values, there are other reasons why the neighborhood of your home matters, especially if it’s going to be your primary residence. So talk with your realtor and locals or drive around, assessing if it is the right location for you and your family.
Mistake #6 – Missing a Potential Good Home
Sometimes new first-time home buyers miss the opportunity of seeing a potentially good home due to outdated decor, brass fixtures, or maintenance issues, despite having the perfect location and reasonable price. Thus, if you’re not willing to pay a hefty price for modern decors, it is cheaper to do home renovations and hire a contractor, saving you more money.
Mistake #7 – Skipping Home Inspection
Skipping home inspection is one of the reasons why other first-time buyers regret their purchase and do not get their money’s worth after finding issues on the property when the deal was closed. So if you have a prospective home to purchase, conduct a home inspection to determine if there are maintenance issues to negotiate the price or back out with the transaction.
Mistake #8 – Transacting With Sellers Agent
It is better to hire a trusted realtor to ensure you’re getting the best deal. Although the seller has their realtor, they only advocate what is good for the seller since they paid for their services. Also, if the seller’s realtor is a transaction broker, their only concern is to close the deal without making suggestions, recommendations, and advice.
Mistake #9 – Overlooking Closing Costs
Since first-time homebuyers don’t have experience with the buying process, they often overlook the closing costs, including realtor commission, lender fees, governmental expenses, and other expenses to get the house keys. So you should allot around 3%-5% of your home’s total sales price for the closing costs or seek assistance programs.
Mistake #10 – Expensive Spending While House Hunting
Lastly, avoid spending big while house hunting. Even if you got a pre-approved loan, don’t buy unnecessary things that can affect your credit card bill. Remember, you applied for a loan to buy a home, so don’t think of buying a new car or truck. Also, once your income limit changes, so does your eligibility to get a loan.
Purchasing a home in Colorado can be exciting with the overwhelming property offers. As a first-time homebuyer, your finances and needs matter the most when closing a deal. Additionally, seeking help from experienced realtors can make your experience even better. So we hope that with our first-time home buyer guide, you have learned the dos and don’ts of shopping for your future residence.