A Beginner's Guide to Buying a House in Aurora, Colorado
Are You Ready to Buy?
Buying a house for the first time is a thrilling prospect, but how do you know if you’re ready? Here are three important factors to consider.
1. How Long Will You Live There?
If you aren’t planning to live in your home for at least five years, you’re probably better off renting. Why?
There are many extra costs associated with buying a home, which we’ll discuss more later. If you turn around and sell your home shortly after buying, you’re unlikely to make back the money you spent on closing costs and interest payments.
2. What About the Down Payment?
For a select few, such as veterans, purchasing a home for zero down may be a possibility. For the vast majority of buyers, though, you’ll need to have a significant chunk of cash on hand for the down payment.
Traditionally, this was 20% of the purchase price. In some areas, you may be able to get by with as little as 3.5% down, although 10%-20% is more realistic.
3. Consider Your Current Debt and Credit Score
Buying a House: Understanding the Process
So, you’re committed to staying in your home long-term and your financial situation is in order.
Congratulations! You’re ready to begin searching for your first home. Here’s a brief rundown of what to do next.
1. Find the Right Real Estate Agent
Is it possible to buy a home without the help of a real estate agent? Yes, but there are compelling reasons to use one.
An experienced agent will be able to guide you through the complicated process of buying a home, from pre-approval to closing. Because they have intimate knowledge of the area, they’ll also be able to help you locate a home that’s perfect for you and your family’s needs.
2. Get Pre-Approved for a Mortgage
When you do find a home you’re interested in, you want the seller to take you (and your offer seriously).
The best way to do this is to get yourself pre-approved for a mortgage before you start hunting. In basic terms, this assures the seller that you have the means and ability to buy the house.
To be pre-approved, a lender will consider your income, employment status, debts, and assets. You’ll then be “pre-approved” for a mortgage loan up to a certain amount.
3. Begin Your Search
4. Make an Offer
When you’ve found the house that makes your heart go pitter-patter, it’s time to make an offer.
In today’s competitive real estate market, this is no time to be wishy-washy. If you fall in love with a house, it’s guaranteed that others will too.
Don’t waste time. Make an offer on a house you’re truly interested in–that same day, if possible. Your real estate agent can advise you on how much you should offer.
5. Be Prepared to Negotiate
If you low-ball your offer, chances are the seller won’t take you very seriously.
One of three things will happen when you make an offer. The seller will either reject it, accept it, or make a counter-offer. If they make a counter-offer, you have the same three options available to you.
Sound tricky? It can be. Again, this is where the right real estate agent can be your most valuable asset.
6. The Closing Process
Once you and the seller have reached a price you both agree on, you’re ready to move onto the final phase–the closing.
The process will vary by region and mortgage company. In general, expect to put “earnest money” down for a home inspection and appraisal–likely 1%-3% of the purchase price.
You’ll also need to pay associated closing costs, which include attorney and title fees and the rest of your required down payment.