First Time Home Buyers Guide
Buying your first home can feel overwhelming, but it doesn’t have to be. At the Tucker Group Real Estate, we have the expertise and take the time to educate and guide our clients through the entire process. Here are a few things to consider as you begin the process:
1. Find the Right Real Estate Professional
Obviously we feel good about Tucker Group Real Estate under the direction of Jonelle Tucker, Broker/Owner. However, we encourage you to get referrals from friends, families and colleagues; interview more than one Realtor, and read reviews provided by past clients. Take the time to find someone with whom you resonate, who listens to you, and has systems in place to understand your needs. We begin our client relationships by understanding our Buyers’ goals. Finally, be sure you understand your Agency Relationship with your Real Estate agent to know if you are their priority or just another prospect.
2. Determine How Will You Pay for Your Home?
Many people rely on a loan to buy a property. Below are some of the key steps to get pre-approved by a lender:
- Build a Good Credit History – pay your bills on time, get a credit card and pay the balance off every month, don’t cancel credit cards, don’t make any larger purchases prior to applying for a loan or until you have closed on the property.
- Determine What You Can Afford – Talk to a lender to determine how much home you can comfortably afford given your lifestyle and current debt. If you’re more than 3 months away from your purchase, use this information to plan. If you’re ready to move forward have the lender prepare a Pre-Approval Letter up to your comfortable purchase price. Ask the lender to counsel you regarding additional Closing Costs (loan fees and escrows, taxes, homeowner’s insurance, recording fees, etc.) and additional Monthly Payments (e.g. utilities and Homeowner Association Dues) associated with various types of properties.
- Save for your Down Payment – if after talking with your lender you need to save more money, set a goal to this end. There are many loan packages with down payments as small as 3% to 5% to the recommended 20% of the property’s value and above. With 20% down you do not have to pay Private Mortgage Insurance (PMI).
3. Locate the Right Property
With your Buyer Goals in hand, you and your Realtor should be keeping tabs on the market. Your agent should provide a tailored automated search and if you’re very close to making an offer possibly previewing and trying to locate possible options on your behalf. As the buyer, if you’re not quite ready, you may play a more active role by visiting prospective neighborhoods and driving by properties that are of interest and providing your Realtor with feedback.
4. Making the Offer
Prior to and during the offer process you’ll want to:
- be sure your Lender Letter of Pre-Approval is updated and tailored to the property of interest.
- confirm you have adequate and verifiable cash for closing.
- prior to writing an offer, make sure you have carefully inspected the property so that your offer price reflects your basic knowledge of the home’s condition especially related to updates, repairs, landscaping, etc.
- review any available information from the Sellers.
- review the offer contract and various options and provisions with your Realtor.
- let your experienced Realtor, if serving as your Buyer Agent, guide your negotiation; if it’s meant to be it will happen. If you’re working with a real estate professional and everyone gave it the full effort and you still you missed out, move on to the next property.
5. While Under Contract
Your Realtor is responsible for helping you through the entire process and protecting your earnest money. Review the contract carefully to ensure you understand it and that all dates and deadlines are met on time. Note that real estate contracts are legal documents. Clients are always advised to have them reviewed by an attorney. Once you are successfully under contract, expect to see information and follow up on the following items:
- Title to the Property – in Colorado it is customary for the Seller to provide clear title. Everything is negotiable though so be aware that there could be a charge for Title Insurance. Also, the lender will require a separate title policy that you will be required to pay for as part of the Loan Closing Costs.
- Loan Application, Appraisal and Loan Approval – currently lenders are requiring 45 to 60 days to close loans primarily due to regulations and the shortage of qualified appraisers.
- Buyers generally pay for the majority of inspections prior to closing. Ask about our guide to Property Inspections. Realtors should also have a list of trusted inspectors who have been evaluated by past clients.
- Buyers need to confirm they can get and afford the property (homeowner’s) insurance which is required if there is a loan. Cost of insurance may be a concern in flood and wildfire prone areas.
- Keep your credit stable by waiting to purchase any big ticket items or changing anything related to your employment until well after closing.
- Utilities – confirm all utilities are transferred on the day of close – verify all utility providers and set up accounts in your name.
- Movers – decide how you will move and then get at least two quotes from moving companies or plan a moving party with your friends.
6. After Closing
The National Association of REALTORS® and Tucker Group Real Estate recommend the following after you’ve closed and settled into your new home:
- Maintain files, both electronic and print of your Closing Documents (especially Settlement Statements) and Loan Information, Warranties, and Insurance Documents. Some of these should be kept in a fireproof box or outside of the home.
- Protect your new asset by obtaining or maintaining your homeowner’s insurance.
- Weatherproof your new home. Save money while reducing your impact on the environment. Consider: a Blower Door Test to see where leaks are most prominent and sealing as appropriate, installing efficient light bulbs, servicing your furnace, AC units and swamp coolers annually and changing filters at minimum quarterly.
- Get to know your neighbors and explore your new location.
- If you are happy with the work of your real estate professional, provide a review and please consider recommending him/her to friends and family.