Your first home! Emotions bubble up, fears of making a costly financial mistake, concerns over all the necessary steps. And in Boulder Colorado, maybe some anxiety hearing about the Seller’s Market and multiple offers a first time home buyer can run into.
So, where to start? Here are eight suggestions for success when it comes to getting your first house!
Start Saving Early
One of the smartest first time home buyer tips out there is to prepare financially. Some of your efforts should be on saving. You’ll need funds for a down payment. Though maybe not as much as you think.
The day you finalize the sale – closing day in Colorado lingo – you’ll also need funds to cover the closing costs. Save for 1 & 1/2 percent in closing fees and pre-paids (taxes, HOA fees).
You’ll need emergency money for unexpected issues. Look at Texas as it recovers from a hundred year snow storm with all sorts of unexpected consequences.
Month to month, maintaining a home requires funds – for furnace filters, minor repairs, landscaping and preventative care visits for systems such as heating and cooling. There are all manner of annual chores when it comes to maintaining your investment!
Buying and maintaining a home requires cold hard cash. So start the saving process early.
Stop Buying Crap
Well, maybe that is a little harsh. A kinder, gentler heading might suggest looking into your financial health. The point is, besides having the funds to purchase, you need the credit score and available credit health to qualify.
The biggest deal killer is the myth that making an expensive car payment will help you qualify for a home. Every list of first time home buyer tips should start out saying, “Don’t buy a car!” Why not? Lenders look at two metrics for your financial ability.
A. – your debt, especially in terms of monthly payment responsibilities. A car is an expensive item that will devour your ability to qualify for the monthly mortgage payment. So don’t do it.
Moreover – if you wait to buy your home first and then your car – you are apt to get a better interest rate on the car purchase!
B. Your credit score. Better scores entitle home buyers to lower mortgage rates and in turn either lower monthly home payments or more purchasing power.
As I’m jotting this post, it is an insane seller’s market in Colorado. So having additional purchasing power may prove critical to successfully winning a bidding war.
Contact Realtor Bob Gordon re: credit score
I’m no lender, just a Realtor. But I can put you in touch – early in the process – with an upstanding mortgage professional. This way you can get your credit score and time tested recommendations for improving your credit if necessary.
Having a top rated Realtor assisting you early is one of the smartest time tested first time home buyer tips out there. Yes – I’m a real estate agent. Sure, it is my job to say this. Consider though – the Seller has an agent, your competition has an agent. You deserve an agent. This isn’t the market to try and save 1% in commissions. This is the market to be best prepared and succeed in negotiations for your first house!
Knowing your credit score and understanding what to improve are the sort of first time home buyer tips that will more quickly get you into your dream home.
Consult A Professional Local Mortgage Lender Early
I suggest local versus online because most every client is slightly different. Maybe you have wealthy parents looking to gift you the down payment. That’s common around Boulder, but unique in terms of a mortgage.
Or you could have oodles of cash, but limited credit. Or maybe your income is derived from dominating three unique side hustles as opposed to one traditional career job. All unique and yet frequently encountered local scenarios.
A good mortgage lender will help you determine the right loan and the risks associated with it. For instance, a lot of first time home buyer tips and suggestions articles detail all the loan types. FHA to USDA. But, in this Colorado Sellers Market you need to understand the inherent downsides to FHA versus conventional financing. Especially when it comes to competing offers.
In 2021 Open Houses Are A Thing Of The Past
Older lists likely suggest visiting open houses and getting to know what you like. That sort of advice is not relevant in February 2021 along the Colorado Front Range.
First off, it is a fierce Seller’s Market. Case in point. Showed a first time home buying client and his mother (bringing a parent, spouse, Bestie along to see homes is a good idea) several homes. He saw one he liked, a nicely updated split level a short commute to Boulder. We made an offer at 4% over list price. Alas, there are twelve offers. Each is a minimum of four percent better than list price.
What’s happening here is the buying landscape is changing. Will it be the cash buyer or repeat purchaser or the first time home buyer tips the scales with the winning offer? It’s more critical than ever to be fully prepared. What’s that mean?
Fully Prepared First Time Home Buyer Tips
- Offer needs to be solid. This is not the market to nitpick or ask for something unique.
- Buyer needs to be pre-approved. Get your financing in order before viewing houses.
- More than just having funds available, provide Proof of Funds to close.
- Be prepared to make concessions – at appraisal or inspection for instance.
- Searching 15% Below your maximum price point.
Buying More No Longer The Rule Of Thumb
For the longest time, the unwritten rule has been to buy the most home you can as a first time buyer. Heck, the pandemic sort of reinforces that idea. Those that previously bought a little more – an extra bedroom, an unfinished basement – they have room for a home office or in house gym. But, with the unprecedented Seller’s market and lack of inventory (see county stats for January), now is the time to buy less.
Not necessarily less house, but to shop 15% below your maximum budget to allow space to compete for the right house. Because it might take four, eight or even eleven percent over full price to win a bidding war this Spring. And then you may also have to cover an appraisal gap. Understanding the nuances of the market now is critical to succeeding in purchasing your first place.
Making a competitive offer is more important than ever in a Seller’s Market. You may not get an opportunity to improve the original offer. When sellers get multiple offers, they tend to simply negotiate with the very highest offer only.
List Features and Location Preferences
Know what you are seeking. Write it out. Is the garage the most important feature? Does location trump having a basement for expansion? Having your list written and with you might help you spot a diamond in the rough. A home that meets more of your requirements than you realize while only seeing lots of work ahead due to condition.
Having A Thorough Home Inspection No Matter What
It’s not uncommon to see Boulder home buyers waive an inspection objection. Or agree ahead of time to limit what will be considered an issue.
But, don’t simply skip the process. The Colorado contract to buy and sell real estate explicitly gives you the right to have an inspection. This is one of those smart, highly recommended first time home buyer tips. Get the place inspected. Do the due diligence. Bring in a radon test, scope the sewer line. Peer behind walls with infrared.
While you might be contractually limited or boxed in by a back-up offer, you still want a thorough understanding of your house. And the ability to walk away if facing a major hidden issue.
Party Like Its 1999
Once you get to the closing table, sign the paperwork, get the keys and take possession of your first home, its time to party like its 1999. Back then, we only had to worry about Y2K. No masks, no pandemic, lol, the good ole days. Give me a shout to discuss the process and getting started. I’m looking forward to hearing from you.