So...You've decided to make the leap and purchase your first home! Congratulations!

Rather than discuss the many benefits of home-ownership, I want to start from the beginning and dive-in to the basic steps and how to successfully navigate your first home purchase.  Many people just don't know where to begin.  I'll first go over the process and time-frames and below have recommendations to get started.

Step 1: Review your budget and learn how much home you can afford. This may seem basic but you'd be surprised how often this issue comes up further down an unnecessary road. Many mortgage loans like to see your total monthly debt (including a new mortgage payment) to be no more than 45% of your gross income. Once you learn how much monthly you'd like to spend, it's just a matter of doing the reverse math to learn the loan amount. This can vary based on how much you put down. See our Loan Calculator Here for a start in the right direction. A loan pre-approval will be an important part of this step but we'll cover more on that below.

Step 2: Understand and plan your time frame. The overall time-frame to purchase surprises many first time home buyers. The average from the time a seller accepts your offer until closing is 30-45 days. Each case is unique however your mortgage loan can take up to 30 days on it's own. All deadlines, including closing, possession, your inspection, appraisal and loan objections are fully negotiable and agreed upon up front as part of your offer.

I often encourage buyers to wait until they are within 75 days of when they need to move before looking too seriously because properties are constantly coming off and on the market. If you find the property of your dreams, they may not be willing to wait for you in today's competitive environment.

Step 3: Start searching for your new home (AKA the fun part). Now's the time to step away from the computer screen and go see some properties!  Once you've been out to see a few potentials, you'll start to get a great feel for the bang of your buck. Unless you have a specific neighborhood in mind, it can be a good idea to experience the different values, age of homes and price per Sq. Ft. that different areas offer. We always encourage you to work with a buyer's broker (who 99% of the time is paid by the seller) because you have an experienced negotiator looking out for your best interests. People often call the listing broker on the sign not realizing they exclusively represent the seller. 

It's also important to stay on top of the market using automated emails (we do have this feature on this site once you sign up). Because the time homes stay on the market is getting shorter and shorter, you have the best chance of landing it if you are one of the first through the door.  

Step 4: Make an offer. Once you've found the property and have decided to make an offer, you'll need to work closely with your real estate broker to pull the paperwork and contracts together. It is possible they may counter on price, terms, dates or any combination. Working with a good broker who is well-versed in multiple offer scenarios and can complete analyses to make sure your offer is on-target.Offers are typically presented in the form of a purchase contract that you sign and are looking for the seller to apply their signature. Once they sign it and a meeting of the minds has been reached, you're officially " Under Contract". 

Step 5: Due diligence. We work together to make sure there are no surprises. As you are marching towards closing and working with a loan officer on your mortgage, we have to keep a close eye on the pre-set deadlines for inspection, appraisal, etc. Now is the time to really look at the house in a long-term way and work to understand the past and future maintenance that you're buying into. The Colorado real estate purchase contract is very "buyer friendly" and gives you as the buyer every opportunity to back-out for almost any reason as long as it's done within the deadline. Everything from a neighbors barking dog, air-flight patterns and of course house issues are allowed reasons to terminate the contract.  Being educated and comfortable in your new investment should be your broker's #1 priority.

Step 6: Finalize your loan, Close & Celebrate. As part of their loan underwriting, your lender will need to verify tax returns, bank statements, pay stubs, credit, complete an employment verification and clarify any gift funds or discrepancies. Once all inspections and appraisals are complete along with your financial documents, the mortgage can be finalized and you can be given the best news yet: "Clear to Close". Closing often only take about an hour and then you can begin a new chapter in your life! Time you celebrate - you did it!

Key Players

The average real estate transaction is touched by over 100 professionals from start to finish.  Here are a few that important to choose wisely and stay in touch with throughout the process (and beyond):

Mortgage Broker - See our Financing Page for our recommendations. We strongly encourage you to go with a small mortgage company or independent broker rather than your bank as they are much more geared towards helping folks refinance rather than purchase.  Deadlines are commonly missed and can your transaction and good-faith (earnest money) deposit at risk.

Realtor/ Real Estate Broker - Obviously we'd love to be your broker. Even if we're not, we encourage you to be represented at the very least. Not only do you typically not have to pay us directly, but having a fiduciary/negotiator in your corner who has been through this process before is invaluable. We are the hub of all communication and pave the way for a successful purchase. There are a lot of pitfalls an experienced professional can help you avoid and can help relieve a lot of stress. 

Inspectors - We highly recommend a general home inspection on as part of your due diligence.  It can alert you to larger problems, but know that they are not experts in every trade. Commonly they'll be able to tip us off that something doesn't look right and recommend that we further investigate with a licensed professional (electrician, plumber, structural engineer, etc). Other inspections such as sewer scope, radon tests, well/septic tests, lead or meth tests may also make sense depending on how deep you want to dig. See our article: Thinking Big About Inspections

Title Company - These folks are responsible for coordinating all closing and loan paperwork, accounting and disbursement of all money and finally insuring you and your lender against claims or lawsuits regarding title or deeding of your new home. 

We hope this guide has been helpful and can show you the process is not as daunting as it may initially seem. Through proper planning, qualified professionals and great execution, your new chapter may be closer than you think.  We are always happy to help answer questions, project payments and get you started - 303-564-1889.