Photo: Matley0 via Flickr
Are you ready to start the process of buying a house in Denver but don’t know what the first steps are? This is a question I get asked most often so here is a quick list to get the ball rolling down the correct path. Once you do decide this is the direction you would like to go make sure you take time to sit down with your real estate agent to discuss the steps and details that will happen during the home buying process as to avoid any surprises.
1. Decide what you can afford. Generally, you can afford a home equal in value to between two and three times your gross income. A mortgage lender can help you come to a price range that’s comfortable for you.
2. Develop your home wish list. Then, prioritize the features on your list.
3. Select where you want to live. Compile a list of three or four neighborhoods you’d like to live in, taking into account items such as schools, recreational facilities, area expansion plans, and safety. Your real estate agent is a great resource for this, they may help you discover other areas that you didn’t think of that match your home criteria and price range.
4. Start saving. Do you have enough money saved to qualify for a mortgage and cover your down payment? Ideally, you should have 20 percent of the purchase price saved as a down payment. Also, don’t forget to factor in closing costs. Closing costs — including taxes, attorney’s fee, and transfer fees — average between 2 and 7 percent of the home price. If you don’t have 20% saved don’t worry there are other options. Your real estate agent and lender can help you explore all options.
5. Get your credit in order. Obtain a copy of your credit report to make sure it is accurate and to correct any errors immediately. A credit report provides a history of your credit, bad debts, and any late payments. IF there are items that are mistakes and/or inaccurate then your mortgage lender can guide you through the process of correcting these items.
6. Determine your mortgage qualifications. How large of mortgage do you qualify for? Also, explore different loan options — such as 30-year or 15-year fixed mortgages or ARMs — and decide what’s best for you.
7. Get preapproved. Organize all the documentation a lender will need to preapprove you for a loan. You might need W-2 forms, copies of at least one pay stub, account numbers, and copies of two to four months of bank or credit union statements.
8. Weigh other sources of help with a down payment. Do you qualify for any special mortgage or down payment assistance programs? Check with your state and local government on down payment assistance programs for first-time buyers. Or, if you have an IRA account, you can use the money you’ve saved to buy your fist home without paying a penalty for early withdrawal.
9. Calculate the costs of homeownership. This should include property taxes, insurance, maintenance and utilities, and association fees, if applicable.
10. Contact a REALTOR®. Find an experienced REALTOR® who can help guide you through the process.
Denver is a large city with many different areas and neighborhoods, it’s best to have the basics taking care of before you start viewing homes. By doing this you can focus on the features and Denver neighborhoods during the search process and be ready to go when you find one you are interested in calling your home.
Loving Denver Life,
Vali Hooker
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