6 Ways a First-Time Home Buyer in Denver can ‘One-Up’ the Market
Positioning Yourself as a First-Time Home Buyer in Denver
Being a first-time home buyer in Denver can be a scary undertaking-especially in this market! It can also be one of the most gratifying things you can accomplish! Of course, your level of preparedness, and who you work with, will make all the difference. Here are a few tips to consider when buying a home for the first time.
Know Your Loan Options – There are several loan options for a first-time home buyer in Denver. Firstly, you have a traditional mortgage where you put down 20%-25% of the purchase price. Some conventional mortgages allow as low as a 3% down payment, however putting down 20% will give you the lowest monthly payment, and you will avoid PMI (Private Mortgage Insurance).
Not everyone has the ability to put down a quarter of the purchase price, which leads us to the FHA Loan. This option will allow you to access the same property, but you only need to put down 3.50%. The disadvantages are a larger monthly payment, as well as monthly PMI.
There are also grant programs such as CHFA (Colorado Housing Finance Authority). CHFA will give you a small grant that can apply to your down payment if you qualify, and complete the required course. Keep in mind, not all lender or banks have access to CHFA, so consult your mortgage advisor or Realtor (R) on where to access this grant.
Get Pre-Approved – This tip is essential in the current real estate market. Going through the pre-approval process will give you an understanding of what you can actually afford! Knowing this will narrow your search further, which will bring you one step closer to your dream home.
Also, let’s not forget we’re in a competitive market, and you are competing against many other buyers! Getting pre-approved by a local lender will make your offer stronger versus a buyer who has not started the process, or is only pre-qualified–yes, there is a difference.
Know What You’re Getting Into
Pick the Right Neighborhood – Be sure to research schools in the area, local amenities, crime, and trends in the community. Look into the impact of real estate values during good economic times, as well as bad–know the potential downside. Picking the right neighborhood will not only give yourself better quality of living now, but it will also give you a leg up with resale value in the future.
Understand Closing Costs – Not every buyer realizes this fact, but you need to come to the closing table with more than just your down payment. Costs such as origination fees, appraisal fees, title search and insurance, taxes, and deed-recording fees need to be accounted for. The “rule of thumb” for calculating total closing costs are roughly 1%-2% of the purchase price.
Make a Strong Offer – In this market, it’s best to stand out. Getting pre-qualified before submitting an offer is only one way to gain leverage over your competition! Consult with your Realtor (R) on terms such as price, dates and deadline, etc.
Get an Advantage with NPRE – It’s important to pick an expert who knows the market, contracts, negotiating, and has relationships with lenders. At New Perspective Real Estate, we have a track record of helping first time home buyers through the entire process! If you’re considering buying a home for the first time–call us, we’re interested in helping you!