Buying a Home in Colorado Springs with the Ashford Realty Group
Home buying is a big commitment, likely one of the biggest purchases you’ll ever make, so preparing as much as possible for the process and knowing what to expect can eliminate some of the headaches. These steps will help prepare anyone in purchasing a home and making the best decisions for your home buying experience to be a success.
Are you ready?
An important question to ask yourself. Are you absolutely certain that purchasing a home is what you want to do? Time for a little soul searching to determine if buying a home is what is best for you. Are you ready to settle down in one place for a while? Obviously, this is a personal decision that you don’t want to make lightly. If you are still on the home buying path after your soul search, move on to the next step.
Check your finances
When purchasing a home, you need to make sure that your finances are solid. Any lender financing a loan for a home will want to not only confirm your current income by reviewing your pay stubs but also review your income history to confirm a steady flow of income. It’s also important to review your credit score, the better your credit score, the better your interest rate. There are several different mortgage calculators that can help you determine how much you truly can afford. The mortgage calculators provide a rough estimate of how much your house payment will be with a certain interest rate and after applying your down payment and other miscellaneous debts. A mortgage calculator can truly put things in perspective, making sure that you don’t get in over your head.
Save your Money
While not all loans require you to pay a down payment, it isn’t a bad idea. Down payments can not only reduce your overall monthly payment, lenders tend to give you a better interest rate. There are also closing costs that you need to be prepared to pay and depending on what you agree to you may end up not only paying your own closing costs but also the sellers as well. Be prepared to cover both.
Make a List
Planning ahead can make things a little easier for you and your agent. Start making a list of areas you are willing to live. Making decisions on features you may want but, you can live without vs.features that are an absolute must. This will help your agent find homes that meet your specifications and prevent wasting time.
Determining what type of loan is right for you and getting pre-approval from a lender is a must. Shop around for the lender that’s right for you. Don’t limit yourself to one lender, give a few lenders a chance to win your business. Yes, your credit will get a hard inquiry hit but, if the timing of the lender's check is close enough together, your credit should only get one hit. Ask friends and family to recommend a realtor if you don’t have one already in mind. You want to avoid using a realtor that is also the seller's realtor because you want someone looking only for you during this transaction.There are several types of loans available when buying a home, each one having different requirements that have to be met.
- Conventional - The most common loan for homebuyers,requires a down payment some as low as 3% down.
- FHA Loan - The FHA loan does have a credit score requirement but, it isn’t as strict as other types of loans and usually require a down payment of as low as 3.5%,
- VA Loan - The VA Loan is available to military service members, veterans, active duty and qualifying spouses are eligible. The VA Loan does not require any down payment and is backed by the Department of Veterans Affairs.
- USDA Loan - The USDA Loan is a bit more restrictive, this type of loan requires the home to be in certain rural and suburban areas; the approved areas are subject to change. Home buyers also have to meet income requirements but, if approved there is no down payment required.
Once you receive your pre-approval and you have the pre-approval letter in hand, now it’s time for fun, time to start shopping. Make sure to communicate with your realtor the “must haves”, what some of your top priorities are to find the perfect home for you.
Make an Offer
This may end up being a little bit like a tennis match. If you make an offer and the seller doesn’t accept the offer, they may come back with a counter offer. This type of negotiation could go back and forth a few times before either you as the buyer or the seller concedes or you decide it wasn’t meant to be and you walk away. Most of the time when you make an offer on a home, you’ll want to include an earnest money deposit. An earnest money deposit is a small amount of money, typically 1% - 2% of the purchase price that will eventually go towards your down payment and closing costs. If you agree to purchase the home and decide to walk away, you will not get the earnest money deposit back. It is recommended that when making an offer on a home that there is contingency based on the home inspection, this way a home buyer has options to back out without fear of losing their earnest money deposit if there are major issues the seller refuses to repair.
While most lenders don’t require a home inspection, it is a smart decision to have one. You will be responsible for hiring a professional and paying for the inspection to be completed. Once the inspection is complete, review the report with a fine tooth comb. If there are major issues, at this point you can go back to the seller and ask them to correct the issue. If you can’t reach an agreement, it may be time to walk away. Once you close on a home, the repairs all lie on your shoulders.
A home appraisal is an absolute must, As with a home inspection, home buyers will want to put a home appraisal contingency in their offer to protect them. Lenders require a home appraisal to ensure that they are not lending more money than the property is worth.
The time consuming tasks have now been completed, both parties have agreed on the sale, now it’s time to do the final walkthrough. This is your last chance to make sure that nothing has been left behind by the sellers and if there were repairs that were supposed to be completed, ensure that they have been done.
You’ve made it! The final step before getting handed the keys to your new home. Get your checkbook ready, it’s time to pay the closing costs and agreed upon down payment. What seems like a book of paperwork to sign, going over the loan agreement, proof of funds and signing of the mortgage note committing to pay the loan. And that’s a wrap, you are now proud homeowners. Congratulations!
For more information on buying a home in Colorado Springs, contact our office below. We have buyer’s agents ready to help you buy a home, connect with a lender and get you into the home of your dreams!